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Lacklustre response to EU's low carbon policy

The policy, which will aim to cut emissions by 40%, has been called "toothless" by Greenpeace

The European Commission (EC) has unveiled plans to cut Europe's greenhouse gas emissions (GHG) and to boost the share of renewables in the continent's energy mix between now and 2030. The white paper, which was released on 22 January, outlines the Commission's plans to cut GHG emissions by 40%, from 1990 levels, by 2030.

The commission has asked the European Council and the European Parliament to agree on the emissions cut proposal by the end of 2014, thus enabling the pledge to be incorporated into negotiations for a new global climate agreement in Paris in 2015. The Commission also plans a European Union (EU) wide target for renewable energy to comprise at least 27% of the group's energy mix by 2030.

The white paper is designed to build on the previous 20:20:20 EU climate policy. This policy envisaged a 20% reduction in GHG emissions below the 1990 level, a 20% share for renewable energy sources in the energy mix and a 20% saving in primary energy consumption, all by 2020. The new 2030 proposal aims to take further steps towards the EU's aim to cut greenhouse gas emissions by 80-95%, from 1990 levels, by 2050. The Commission says marking out this EU-level target for renewable energy is necessary to drive investment in the sector. The renewable energy targets will not be legally binding and it will be up to individual member states to decide how to achieve them. The Commission says this is the best and most cost-effective way to cut carbon emissions.

Commission president José Manuel Barroso said the emissions reductions plans were both ambitious and affordable. He also defended the decision not to make the renewables targets legally binding. "One lesson we have drawn from experience is that they (legally binding targets) risk the fragmentation of the internal market and do not allow us to reach the targets in the most cost effective way," Barroso said. "We have seen in the past in some countries there were distortions because of these national targets on renewables, including heavy subsidisation, with sometimes important costs for competiveness."

However critics say the Commission has set weak renewable energy targets which are unlikely to be enforced because member states will not be legally obligated to do so. Environmental activist group Greenpeace said it was a "toothless policy...which will do little to tackle climate change". Greenpeace wants the EU to agree a 55% GHG emissions reduction target by 2030. 

And Edward Davey, the UK Secretary of State for Energy and Climate Change, says the proposals could have gone further. "A 40% GHG target for Europe is a good start which the UK fought hard for, and will lead to massive investment in low carbon energy, including many more renewables," he says. "Europe must be ready to adopt a 50% target if the rest of the world is prepared to sign an ambitious global climate deal in 2015." Davey adds that the UK 'remains concerned about any renewable target' because of concerns over how much it would cost to achieve the 27% quota.   

A senior EU official told journalists in London the renewable energy target was still binding because each country would have to discuss its national energy plans to develop a co-ordinated plan to ensure the quota was reached.

The European Council will consider whether to adopt the emissions cut and renewable policy at its spring meeting on 20-21 March. The Commission also wants to promote energy efficiency across Europe and to reform the bloc's emissions trading scheme (ETS). The Commission wants to establish a market stability reserve at the beginning of the next ETS trading period in 2021. The reserve would alleviate the glut of around 2 billion surplus emission allowances that has built up because of weak demand. The ETS has been regarded as a failure as Europe's carbon emissions have risen, since its introduction in 2005, and low carbon prices provide little incentive to cut coal use. Low carbon prices and the economic crisis have helped to increase Europe's coal consumption. Coal made a comeback into Europe's energy mix after 2008 displacing some of natural gas' share. Europe is now the second fastest growing market for coal in the world. In 2012 Europe consumed 517m tonnes of oil equivalent (toe) of coal, according to Cedigaz. This is up from 471m toe in 2009.

The Commission recently agreed to delay auctioning 900m emission allowances until 2019- 2020 because of weak demand. The Commission also wants to improve the system's resilience to major demand shocks by automatically adjusting the supply of allowances to be auctioned. The Commission also published a set of recommendations covering shale-gas development in Europe, including guidelines for environmental monitoring and informing the public about chemicals used in wells. The Commission wants EU member states to start applying the recommendations over the next six months and to report their findings from December 2014. The commission will then review the effectiveness of this approach in 18 months time.

A senior EU official told Petroleum Economist that the recommendations, which are not legally binding, are designed to enable the shale gas industry to develop in Europe. However, the official, who declined to be named, added that the Commission was very bearish on prospects for European shale gas development between now and 2030. "The US shale gas benefits may not be translated here (in Europe)," the official said. "Wholesale energy prices in Europe are comparable with wholesale prices in the US but are costs are not the same. Taxes can make up to 56% of energy costs in some countries."

The UK government is lobbying hard to promote shale gas and has offered tax breaks to entice prospective developers. Davey said he was pleased the recommendations on shale gas wouldn't infringe on the country's efforts to promote the sector. "The UK pushed hard for proposals on shale gas to be robust but proportionate and I am pleased that the commission has recognised that existing directives already cover the environmental issues shale gas raises," Davey said. "In the UK, we already have robust regulation in place and we must be careful to avoid delaying this emerging industry by years of debate over regulation that simply duplicates."

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