European Union

EU legislation on climate change has been characterised by a strategy of co-operation with the international community, compliance with the Kyoto Protocol and a will to maintain leadership through ambitious targets and emission reduction mechanisms.

The European Council endorsed the objective of reducing EU emissions of GHGs to 80–95% below 1990 levels by 2050. The Roadmap for transforming the European Union into a competitive low carbon economy by 2050 (the Roadmap) was adopted by the European Commission in 2011. It describes a cost-effective pathway to reach this objective and gives direction to sectoral policies for all economic sectors, national and regional low-carbon strategies and long-term investments. The EU also developed a 2050 Energy Roadmap and a White Paper on Transport, detailing how these emission reductions are to be achieved in the energy and transport sectors respectively.

The Roadmap recommends that the EU should achieve its target largely through domestic measures since, by mid-century, international credits to offset emissions will be less widely available and any credits used would increase the overall emissions reduction beyond 80%.

The economic modelling underlying the Roadmap showed that to achieve an 80% European “domestic” reduction by 2050, cuts of the order of 40% and 60% below 1990 levels should be achieved by 2030 and 2040, respectively. All sectors will need to contribute. It also showed that the most cost-efficient pathway to the 2050 target would require a 25% emissions cut by 2020.

The Roadmap estimated that, over the next 40 years, additional annual investment equivalent to 1.5% of EU GDP – or EUR270bn (USD338.8bn) – on top of overall current investment of 19% of GDP would be required. This proposed increase would return Europe to the investment levels seen before the economic crisis. Much or all of this extra investment would be recovered through lower import bills for oil and gas. These savings were estimated at EUR175bn–EUR320bn (USD220bn–USD402bn) a year. This investment in clean technologies, infrastructure such as “smart” electricity grids and environmental protection would have multiple benefits in terms of reduced energy dependency and created domestic value-added, the development of new sources of growth and employment creation, as well as lower air quality-related health costs which could reach up to EUR88bn (USD110bn) a year by 2050.

In 2011 the Commission published its Proposals for the EU 2014–2020 Multi-Annual Financial Framework, which was adopted by the European Council in 2013. The Financial Framework establishes that 20% of the 2014-2020 EU budget is to be dedicated to climate mitigation and adaptation measures.  

Energy supply

The EU’s energy policy aims primarily at ensuring the security of energy supplies, competitive energy markets with affordable prices, and sustainable energy consumption by reducing GHG emissions, pollution, and fossil fuel dependence.

To pursue these goals within a coherent long-term strategy, the EU has formulated targets for 2020, 2030, and 2050.

The 2020 Energy Strategy (2011) defines energy priorities between 2010 and 2020. It aims to reduce GHG emissions by at least 20%; increase the share of renewable energy in energy consumption to minimum 20%; improve energy efficiency by at least 20%. The 2030 framework for climate change and energy policies (October 2014) lays down the objectives to be met by 2030: a binding EU target of at least a 40% reduction in GHG emissions (base year 1990); a binding target of at least 27% of renewable energy in the EU; an energy efficiency increase of at least 27%, to be reviewed by 2020 potentially raising the target to 30%; the completion of the internal energy market by reaching an electricity interconnection target of 15% between EU countries by 2030 (intermediary target of 10% in 2020), and pushing forward important infrastructure projects. The 2030 framework also launched preparation of the Energy Union aiming at affordable, secure and sustainable energy, by “pooling resources, connecting networks and uniting member states’ power when negotiating with non-EU countries”. Specific legislative proposals are expected in 2015.

A European Energy Security Strategy, adopted in May 2014 partly in response to the political crisis in Ukraine, presents short and long-term measures to guarantee security of supply. It mandates short-term energy security stress tests for individual member states, calls for an increase in emergency gas stocks and developing emergency infrastructure, completion of the internal energy market, reduction in energy demand (especially in buildings and industry) and switching to alternative fuels.

The development of the Internal Energy Market (electricity and gas) has been supported by the First, Second and Third Energy Packages. They enable new entrants in Member State gas and electricity markets; enable consumers to choose their own gas and electricity suppliers and further liberalise electricity and gas markets; regulate transmission network ownership by ensuring a clear separation of supply and production activities from network operation; ensure more effective regulatory oversight by truly independent national energy regulators; reinforce consumer protection; regulate third party access to gas storage and LNG facilities; lay down rules concerning transparency and reporting about gas reserves; and promote regional solidarity by co-ordinating national emergency measures and developing gas interconnections.

The development of renewable energy sources and EU domestic production of energy is addressed through individual member states’ mandatory targets set by the Renewable Energy Directive (2009), which reflects Member States’ different starting points and potential for increasing renewables production (further regulated by the Effort-Sharing Decision, 2009). These range from 10% in Malta to 49% in Sweden. The EU has also put in place European certification schemes, subsidies and other incentive mechanisms to support the use of renewable energy.

Energy demand

The promotion of energy efficiency and energy demand management is ensured in particular through the Energy Efficiency Directive (2012), which establishes a common framework of measures for the support of energy efficiency. Other pieces of legislation also promote more energy efficient products and uses, including the Directive on the energy performance of buildings (recast 2010), Directive on eco‐design requirements for energy‐using products (recast 2009) and Directive on labelling and standard product information on energy consumption by energy-related products (2010).

Carbon pricing

A key component of EU climate legislation is the “Emission Trading System” (EU ETS), which entered into force in 2005 in order to help reach the targets agreed at Kyoto. This mechanism currently covers around 45% of total EU GHG emissions and has been amended several times to extend it to new sectors (for example, aviation) or to new GHGs (besides CO2, the EU ETS also covers nitrous oxides and perfluoro­carbons). In parallel, the EU has set up a mechanism for monitoring GHG emissions to enable a more accurate and regular evaluation of the progress of emissions reduction.

The EU ETS is constantly being improved and initiatives are under way to adjust the availability of certificates over the emission trading phases to address overallocation (i.e. backloading) and ensure greater environmental efficiency of the system. Thus, for the third phase 2013-2020, a single EU-wide cap on emissions was introduced instead of individual national caps, to guarantee the overall environmental outcome of the system. Auctioning of allowances, rather than free allocation, was adopted as the default method – with at least 40% of allowances auctioned in 2013. Allocation rules across Member States were harmonised to limit competitiveness distortions and strengthen the system’s incentives for clean technologies. Finally, 300m allowances were set aside to fund the deployment of innovative renewable energy technologies as well as carbon capture and storage through the ‘NER 300’ programme.

In the next phase of the EU ETS, starting in 2021, the system will undergo a further structural reform. The 2030 framework for climate change and energy policies establishes that the emission cap will be lowered by 2.2% per year from 2021, compared with 1.74% currently. It also proposes the introduction of a market stability reserve (MSR) to address the surplus of emission allowances that has built up in recent years and to improve the system’s resilience. A binding legislative proposal on the MSR, put forward in January 2014, is yet to be adopted, as diverging views exist on the start date of the MSR (2021 or earlier) and on the destination of the 900m temporarily backloaded allowances, which could be either released into the market or placed directly into the planned MSR.

REDD+ and LULUCF

Following the decision adopted at the UNFCCC 17^th Conference of the Parties (COP 17) on revised accounting rules from soils and forests, the EU adopted a Decision on accounting rules and action plans on GHG emissions and removals resulting from activities related to land use, land use change and forestry (LULUCF). This was a first step towards incorporating removals and emissions from forests and agriculture, the last major sectors without common EU-wide rules, into EU climate policy. Member states are obliged to report on how they increase removals of carbon as well as decrease GHG emissions in forests and soils. The legislation goes further than the UNFCCC decision as it phases in mandatory accounting for the management of grassland and cropland at the national level. It is expected that these measures will contribute to enhancing the overall environmental integrity of GHG accounting. In line with the international context, the accounting for draining and rewetting of wetlands remains on a voluntary basis.

The Commission’s proposal for the Reform of the EU Common Agricultural Policy (CAP) after 2013 was adopted in 2013. The reformed CAP integrates climate change mitigation and adaptation measures by introducing two rural development policy priorities for restoring, preserving and enhancing ecosystems, for resource efficiency and for the fight against climate change. Some 30% of the direct payments to farmers are conditional upon the implementation of greening measures that have co-benefits for climate mitigation and adaptation. The payments must comply with EU policies supporting the shift towards a low-carbon economy and promoting climate change adaptation, risk prevention and management, such as the Energy Efficiency Directive, the Water Framework Directive and the Renewable Energy Directive.

The EU’s approach to REDD+ builds mainly on the Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan (2003), which aims to reduce deforestation through preventing illegal timber logging. “The EU supports a policy target of halting global forest cover loss by 2030 at the latest and a reduction of gross tropical deforestation by at least 50% by 2020” (EU Commission). The Commission has also committed around EUR107m (USD134m) in 2007-2012 to support REDD+ pilot projects in Africa, Asia and Latin America. Almost EUR64m (USD80m) are to be channelled through FLEGT. REDD+ activities are co-ordinated by the EU REDD Facility (managed by the European Forest Institute), through bilateral and multilateral initiatives including Forest Carbon Partnership Facility (FCPF) and UN-REDD, and through a number of earth observation projects, such as COCOS (contributes to creation of a global carbon observation system) or DevCoCast (involves developing countries in global environmental data exchange).

Transportation

The EU has set emission performance standards for new passenger cars and new light commercial vehicles, aviation within the EU has been included in the EU ETS, targets for reducing the GHG intensity of fuels have been set, and mechanisms to support research and development of clean vehicles are in place.

In 2009 the EU introduced mandatory emission reduction targets for new cars, amended in April 2014 in order to implement the 2020 climate and energy package targets. The fleet average emission level to be achieved by all new cars is 130 gCO2/km by 2015 and 95gCO2/km by 2021. Emissions from vans are to be reduced to 147 gCO₂/km in 2020 from the 180.2g in 2012 (the latest year for which figures are available), with a transitory 2017 target of 175 gCO2/km. In addition, the European Commission proposed in May 2014 a strategy to curb emissions from heavy-duty vehicles (HDVs – trucks, buses, coaches), given that current technologies should be able to achieve cost-effective reductions in CO2 emissions from new HDVs of at least 30%.

The Fuel Quality Directive, introduced in 1998 and revised in 2009, includes requirements to reduce the GHG intensity of energy supplied for road transport (Low Carbon Fuel Standard) and establishes sustainability criteria for biofuels.

The Commission’s legislative proposal to address the indirect land-use change impacts (ILUC) of biofuels aims to limit global land conversion for biofuel production, and raise the climate benefits of biofuels used in the EU. The use of food-based biofuels to meet the 10% target of renewable energy in transportation in the Renewable Energy Directive is intended to be limited to 5-7%. This is to stimulate the development of alternative, second generation biofuels from non-food feedstock, such as waste or straw, which emit substantially fewer GHGs than fossil fuels and do not directly interfere with global food production. The estimated global land conversion impacts will be considered when assessing the GHG performance of biofuels.

Adaptation

Co-ordination of adaptation policy at the EU level was initiated by a 2009 White Paper. The proposed measures have largely been implemented, including for example the launch in 2012 of the web-based European Climate Adaptation Platform (Climate-ADAPT13).

To further co-ordinate national adaptation policies and create a systematic exchange of best practices, the European Commission proposed in 2013 the EU Strategy on adaptation to climate change, and considers proposing a legally-binding instrument in 2017 if individual Member States’ actions are deemed insufficient. The objective of the Strategy is to “enhance the preparedness and capacity to respond to the impacts of climate change at local, regional, national and EU levels, develop a coherent approach and improve coordination”. It proposes eight specific actions to achieve such an objective, including promoting action in Member States, better informed decision-making, climate-proofing action at the EU level, and strengthening the institutional framework for co-ordination, financing, and monitoring.