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 Oberthür & Tomas Wyns11/19/2014

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

Outline

11/19/2014

2020Sebastian Oberthür & Tomas Wyns

1. 40-27-27 by 2030

11/19/2014

20 20 2020% GHG reductions

by 2020 from 199020% 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 underEffort Sharing Decision(-10% from 2005 – ESD)

National targets under REDirective

• Indicative targets for MS (Energy Efficiency Directive - EED)

• Menu of measures (EED, EPBD, Ecodesign, CO2&cars, Labelling…)

Sebastian Oberthür & Tomas Wyns

1. 40-27-27 by 2030

11/19/2014

2030Sebastian Oberthür & Tomas Wyns

1. 40-27-27 by 2030

11/19/2014

40 27 2740% GHG reductions

by 2030 from 1990

• EU-wide target for EU ETS (-43% ref 2005)

• National targetsunder 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

Sebastian Oberthür & Tomas Wyns

1. 40-27-27 by 2030

11/19/2014

• 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

2. Long-term policy commitment …

Sebastian Oberthür & Tomas Wyns11/19/2014

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

Sebastian Oberthür & Tomas Wyns11/19/2014

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 installedBuildings’ efficiency

Sebastian Oberthür & Tomas Wyns11/19/2014

4. Energy Efficiency: Reinforcing the policy flotilla

(don’t throw away the baby with the bathwater)

Sources: DECC & Carbonbrief

UK domestic energy consumption Efficiency of fridges sold

Types of boiler installedBuildings’ efficiency

Directive on energy label

s

Ecodesign directive EPBD directive

Sebastian Oberthür & Tomas Wyns11/19/2014

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)

Sebastian Oberthür & Tomas Wyns11/19/2014

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?

6. Renewable Energy

Sebastian Oberthür & Tomas Wyns11/19/2014

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

Sebastian Oberthür & Tomas Wyns11/19/2014

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

Sebastian Oberthür & Tomas Wyns11/19/2014

…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)

6. Renewable Energy

Sebastian Oberthür & Tomas Wyns11/19/2014

Thank you!

For more information please contact:

[email protected]

[email protected]

“When it is obvious that the goals cannot be reached,

don't adjust the goals, adjust the actions.”

Confucius

Sebastian Oberthür & Tomas Wyns11/19/2014