Ep 19 november 2014 ies

Delivering the 2030 climate
and energy targets
Long term policy commitments to trump short-term
politics
Seminar on Europe’s Climate and Energy Crossroads,
European Parliament, Brussels, 19 November 2014
Sebastian 11/19/2014 Oberthür & Tomas Wyns

Outline
1. 40-27-27 by 2030
2. Long-term policy commitment and investor
certainty
3. EU Emissions Trading Scheme (ETS)
4. Energy Efficiency
5. Renewable Energy
Sebastian Oberthür & Tomas Wyns
11/19/2014

1. 40-27-27 by 2030
2020
11/19/2014

1. 40-27-27 by 2030
20 20 20
20% GHG reductions
by 2020 from 1990
20% Renewable Energy
by 2020
20% Energy Savings
by 2020 ref. BAU
Binding Binding Indicative
• EU-wide target for EU
ETS (-21% from 2005 –
ETS Directive)
• National targets under
Effort Sharing Decision
(-10% from 2005 – ESD)
National targets under RE
Directive
• Indicative targets for
MS (Energy Efficiency
Directive - EED)
• Menu of measures
(EED, EPBD, Ecodesign,
CO2&cars, Labelling…)
11/19/2014

1. 40-27-27 by 2030
2030
11/19/2014

1. 40-27-27 by 2030
40 27 27
40% GHG reductions
by 2030 from 1990
• EU-wide target for
EU ETS (-43% ref
2005)
• National targets
under Effort Sharing
Decision (-30%
from2005)
27% Renewable Energy
by 2030
• new governance system
• National Energy Plans
• Review of RE directive?!
27% Energy Savings
by 2030 ref. BAU
• new governance system
• National Energy Plans
• Reviews of EED, EPBD,
Ecodesign, CO2 & cars ?!
– indicative targets,
binding measures?
Binding Binding
(at EU level – no
national binding targets)
Indicative
11/19/2014

2. Long-term policy commitment …
• Policy risk is (next to regulatory barriers) important
factor in financing renewable energy & energy
efficiency – two examples:
“A clear political and societal long-term commitment towards renewable
energy is required.[…]This effect can be significant: the levelized cost of
electricity can be reduced by 10 to 30%, as compared to a support
scheme with no particular attention to risk mitigation.”
De Jager et al 2011 for European Commission
Uncertainty over scrapping Australia’s renewable energy target made
that “[investments worth] billions of dollars have been put on hold”
CEO General Electric, Sydney Morning Herald 2014

From carbon price-only to modernisation and
innovation tool
• Market Stability Reserve would increase price stability and hence
investor certainty
• Increased Linear Reduction Factor brings EU ETS more in line with
long-term (2050) decarbonisation.
• New potential: Using EU ETS allowances to fund modernisation in
CEE Member States and innovation in industry/energy sector.
 Can increase support by (critical) stakeholders
 Can help address competitiveness concerns while incentivising
investments in Europe
 Can push structural change (RE and EE)
3. EU ETS

4. Energy Efficiency: Reinforcing the policy flotilla
(don’t throw away the baby with the bathwater)
Sources: DECC & Carbonbrief
Efficiency of fridges sold
Types of boiler installed
Buildings’ efficiency

4. Energy Efficiency: Reinforcing the policy flotilla
(don’t throw away the baby with the bathwater)
UK domestic energy consumption Efficiency of fridges sold
Directive on energy label
Sources: DECC & Carbonbrief
Types of boiler installed
s
Buildings’ efficiency
Ecodesign directive EPBD directive

4. Energy Efficiency
Use the flotilla of EU policy tools (EPBD, Ecodesign,
EED, CO2&cars, Labelling)
• Quite effective, even if results take time to materialise
• Benefit consumers
• Promote domestic innovation, production (comparative advantage)
and employment
Goals for 2030 policy framework:
• Strengthen and streamline these policy instruments
• Lower administrative burden/simplify (where possible), e.g. through
link with IT innovation
• Smart/targeted funding (see also below)

6. Renewable Energy
How to implement an EU level binding target in
absence of national targets?
• EU energy governance needs legal framework – thus review
of RE Directive (and EED) are required!
• Main challenges:
1. How to strengthen the directive and ensure growth of RE across
the EU in the absence of binding national targets?
2. How to enhance investor certainty, reduce policy risk, improve
finance, enhance cooperation between Member States and
address other barriers?

Some preliminary ideas
• No backsliding & anchoring of national commitments and policies for
RE growth
• Indicative national growth targets and trajectories with corrective
action if excessive deviation from trajectory
• Link Member State access to EU finance to approval of national
plans and compliance
• Increase EU support for Member State cooperation (e.g. Projects of
Common Interest)
• New mechanisms to remove financing barriers (leverage institutional
investors etc.)
6. RE and EE

Some preliminary ideas (continued)
• Enhance demand side mechanisms (e.g. public sector procurement)
• Keep and enhance existing mechanisms to remove regulatory
barriers + consider introducing investor complaints procedure
• Introduction of downstream binding measures? (e.g. US type Renewable
Portfolio Standard for suppliers)??
• Review by 2024-5 with option of re-introducing binding national targets
(in case of underperformance)
• Strengthen and streamline national planning and reporting (e.g. NREAP
and NEEAP consolidation)
6. RE and EE

6. Renewable Energy
…but also don’t forget the bigger
picture
• EU economic governance (SGP, MIP, EDP)
 can be barrier for government support for
renewable energy, energy efficiency, energy
infrastructure investments
 could introduce more flexibility for these types
of investments
– Example: allowing budgetary flexibility for
projects that receive “investment grade (AAA)”
label (through EIB)

“When it is obvious that the goals cannot be reached,
don't adjust the goals, adjust the actions.”
Confucius
Thank you!
For more information please contact:
Sebastian.Oberthuer@vub.ac.be
Tomas.Wyns@vub.ac.be

Ep 19 november 2014 ies

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