European Renewable
Energies Federation
Brussels, March 2001
EUROPEAN CLIMATE CHANGE PROGRAMME (ECCP)
ENSURING ITS EFFECTIVENESS - UPDATE
Statement of the clean industry groups, environmental NGOs and academic experts
BACKGROUND
The signatories of this statement have already published a first version of this document in September 2000, which was taken up with great interest and had the effect of stimulating the debate. Furthermore, the Commission has taken up several of the proposed measures. In the meantime, further developments have driven us to provide the European Commission, the European Parliament, national policy makers and the public with a second, updated version:
- The ECCP Process has new working groups on sinks, JI and CDM and subgroups such as on Voluntary Agreements.
- A review of progress so far has been published by the European Commission in November 2000[1].
- The landmark sixth conference of the Parties (COP6) to the United Nations Framework Convention on Climate Change (UNFCCC) was suspended without a result in November 2000, which proves the need for forceful action from the side of the EU, to show the “laggards” in the process that climate protection is not only feasible, but good business, as well. An ECCP resulting in a concrete action plan by May or June will certainly help towards this goal.
Greenhouse gas emissions, particularly of CO2 from burning fossil fuels, are rising steadily in most EU countries due to the lack of appropriate climate protection policies. The present approximate stabilisation of greenhouse gas emissions on 1990 levels in the EU – a better performance compared to most other OECD nations – is mainly caused by a switch from coal to natural gas in the UK and Germany. That has value in itself, but cannot serve to meet the EU target alone. In 1997 in Kyoto, the EU environment ministers agreed to cut greenhouse gas (GHG) emissions by 8% below 1990 levels by 2008-2012. However, much deeper reductions are needed for the decades to come to ensure climate protection. In any case and irrespective of the progress made under the UNFCCC, we now urge the EU governments to make a firm commitment to comply with the Kyoto targets through policies and measures primarily that increase energy efficiency and renewable energy in the various societal sectors.
Policies and measures (PAMs) in the EU are needed to realise the many economic and technical potentials for cutting emissions, especially those in the efficient use of energy in buildings, transport, appliances and industry; and in the development of renewable energy. These are the key strategies, as carbon dioxide (CO2) contributes about 80% of EU-wide greenhouse gas emissions. However, the worrying rising trend in the so-called F-gases (HFCs, PFCs and SF6), which have extremely high global warming potentials, also calls for urgent action in this area.[2]
Generally, the groups represented in that paper fully underline the need for a credible ECCP to cut emissions at source and not to rely on policies that fortunately help to reduce emissions elsewhere such as through the use of sinks and “good housekeeping” in the field of agricultural and waste policies that contribute to cut CH4 and N2O.
A VISION FOR THE ECCP
ECCP and Emission Trading – getting the right balance
We have welcomed the initiative of the European Commission and still do so, to bring all interested stakeholders around a table under the European Climate Change Programme (ECCP). To be successful, the ECCP should lay down a limited number of specific policies and measures primarily in the sector of energy efficiency and renewable energy to be adopted as a matter of priority to achieve the EU climate protection objectives. These PAMs also have other ancillary benefits such as creating additional jobs, reducing dependence on importing fossil fuels and saving money as well as providing a sustainable technology market and export base. The ECCP should furthermore establish the ground rules to provide the necessary consistency between PAMs and the proposed “emission trading” scheme. It is important that the right balance is struck between any emission trading scheme proposed by the Commission and PAMs, which must cover all sectors and smaller emitters as well.
Modelling and assumptions – knowing the limits
The Commission is aiming to identify the least-cost programme to achieve the Kyoto commitment, through the use of two economic models, the top-down PRIMES model and the bottom-up Ecofys Model. We demand that the Commission analyse the outputs from these models carefully. First, they must consider the period beyond 2010 to ensure that the programme does not focus on short term fixes, some of which may make future targets harder to achieve. Second, the Commission must ensure that the models do not produce perverse results, e.g. by using them for the economic evaluation of the PAMs without exposing the underlying assumptions. Of particular concern to us is the ability of the PRIMES model to treat renewable energy sources, cogeneration and energy efficiency fairly. One serious flaw in the PRIMES model consists of its treatment of costs of climate policies and technologies. It does not “know” negative costs. For instance, saved energy costs over lifetime of a superefficient fridge or TV set will more than compensate for higher capital costs. This, however, will not appear accordingly in the model output, nor will ancillary benefits of many climate measures such as new jobs and advanced technology bases.
In addition, the model does not account for potential cost reductions of carbon emission abatements resulting from climate policies or cap and trade systems. Furthermore, even if models are employed to do some evaluation of the PAMs, they are only one tool, even once redesigned and rationalised optimally and there are complex considerations as to why certain activities are better tackled first, no matter how they are ranked in an economic evaluation. E.g. renewables may not be the cheapest option right now, but implementation now is important to attain learning and longer-term attractiveness that will contribute to reduced costs and consequently the required economies of scale in the future.
Ensuring real emission reductions- reducing the risk
The ultimate aim of the ECCP is to deliver real GHG cuts. Thus PAMs that create serious doubts over their effectiveness and ability to deliver or over their mechanisms for verification and enforcement should not be included in the planned measures. If they do prove to be effective and do deliver the targets after all, this will ease the ultimate objective of achieving deeper cuts beyond 2010. Our chief concerns lie with carbon injections in geological formations and deep seas, biological sinks and the European fuel economy agreement with the car industry – the so-called ACEA agreement, which according to interim analysis is falling far short of projections. In addition, the ECCP should define a transparent process to evaluate measurable progress towards the target for GHG cuts--this must include interim targets for 2005. In the event that certain PAMs do not achieve the envisioned reductions, other measures must be identified by the ECCP that can be brought forward rapidly.
Voluntary agreements– making them effective
The European Commission has argued for greater use of this instrument. In any case, the development of a clear and stringent legal framework is a prerequisite for the use of voluntary agreements (VAs) to meet the EU climate objectives. The past experience on VAs, both at national and international level, shows clearly that VAs can not be an independent instrument but may be part of a policy mix including regulation and economic instruments.
GUIDING PRINCIPLES
In order to achieve this vision, the ECCP process and the identification of key PAMs should be based on the following principles:
- Environmental effectiveness. The PAMs should guarantee the achievement of European emissions reduction targets and be able to explore potentials for emission reductions that go significantly beyond Kyoto.
- Cost-effectiveness. PAMs should be cost-effective, inclusive of all external costs. This needs to be pursued through the rapid elimination of harmful subsidies and introduction of appropriate energy or carbon taxes.
- Sustainable development. PAMs should contribute to saving and creating new and sustainable jobs in the European Union. The ECCP should identify those policies and measures that provide a double dividend, that is, climate protection and job creation.
- Accession process. PAMs should take into consideration the implications of the current accession process. By 2010, a number of Eastern European countries are likely to be part of the European Union. Implementation of PAMS should be made possible there as well.
- Safety and hazardous waste prevention. The PAMs should be safe and based on clean technologies and should not create other environmental problems such as nuclear contamination, toxic waste and biodiversity loss.
- Technology forcing. PAMs should be supportive of those technologies that have a high potential to be fundamental for climate protection for the next couple of decades at least.
- Public awareness. Public awareness and involvement are needed if PAMs are to enjoy wide support. Climate policies should be designed in such a way that they can be seen as a benefit rather than a burden.
KEY POLICIES AND MEASURES
With these criteria in mind, there is a strong case for the ECCP and its climate change strategy to adopt, at a minimum, the following package of common and co-ordinated policies. These policies should be underpinned by adequate fiscal measures, such as a European carbon-energy tax or reduced tax burdens on energy efficiency activities.
1. Directives on renewable energy
The EU has a policy objective to double renewable energy from 6 to 12% of inland consumption by 2010. In order to achieve this objective two measures need to be implemented. First, the current proposal for a Directive on renewable energy electricity needs to be strengthened and adopted. The undersigned groups reject any attempts by the Commission and the Member States to dilute the definitions of “renewable energy” towards including unsustainable energies such as large hydro, waste incineration and peat. From our perspective the 12% target is to be met by wind, sustainable biomass, solar (PV and thermal) and other forms of environmentally benign renewable energy only.
Further, the proposed targets for each country, recently weakened by the Council towards "reference values", need to be made legally binding targets if renewables are to be developed significantly and quickly. At the same time, successful national policies that are effective and helping to realise the EU target must not be undermined by badly designed European harmonisation measures. Secondly, additional measures and national targets need to be developed in the heat and transportation sectors. Based on last year's directive proposal, doubling of renewable energy by 2010 can save up to 200 million tonnes of CO2 (Mt CO2) emissions or an additional 6% of 1990 CO2emissions[3][4]. More CO2 reductions can be achieved if the EU adopts renewable energy targets for the heat and transportation sectors.
2.Directive on national frameworks for energy efficiency (EE) of energy use in buildings
The undersigned are encouraged by the Commission's recent uptake of the idea of a framework Directive on energy efficiency (EE) in buildings. Energy savings in space heating, cooling, ventilation and lighting through measures such as insulation, double and triple glazing, more efficient heating (incl. heating controls), ventilation, air conditioning, lighting systems and exchange or renovation of outdated, (and often oversized) heating systems in residential, office and industrial buildings can save large amounts of CO2and money, while simultaneously creating many jobs.[5] As energy consumption in buildings is a very heterogeneous and weather-dependent sector throughout the EU, for instance a simple directive on establishing EU-wide standards on insulation would not be appropriate.
Therefore, a directive that enforces national legislation, combined with energy efficiency programmes and services (see policies and measures proposal No. 7), to retrofit existing buildings according to best available practice and to establish ambitious “low energy” standards for new buildings is needed, including a labelling and certification scheme for EE in buildings. This should include a requirement for energy surveys at time of occupancy alteration for the existing building stock. Furthermore, minimum building code alterations every 5 yearsshould be mandated, as well as a requirement that each consumer is to receive bills based upon actual consumption. Building codes should also include the (decentralised) options of solar thermal, solar PV and heat-pump applications at household level. Potentials for savings of over 400 MtCO2have been identified through efficient heat and electricity use in buildings by 2010 in the EU, amounting to ca. 12% of EU 1990 CO2emissions[6].
- Energy efficiency standards, labelling, and programmes for appliances
Energy efficiency improvements potentials of 40-60% exist for most electrical appliances, often based on minimum life-cycle cost models. The financial return of more efficient appliances is generally positive, but often not perceived as such. Efficiency standards evolving with best available technologies, based on minimum life-cycle cost analysis, must be adopted to harness these benefits and accelerate market transformation (see also proposal 7). This approach should also be used in energy labelling, updating the different energy efficiency classes. Incentives or co-operative procurement for particularly efficient appliances should complement minimum efficiency standards and labelling. Minimum standards for efficient electric appliances could deliver emission reduction of 90 million tonnes by 2010.
4.Directive on the doubling of cogeneration in the EU
The development of cogeneration – the highly efficient production of both heat and electricity in power plants – provides a large and low-cost CO2reduction potential. A Directive with binding targets for doubling of cogeneration to about 18% of domestic electricity consumption by 2010 is therefore appropriate particularly in the context of the present incomplete electricity market deregulation that unfortunately favours the cheapest, which is often the most dirty, power supply. A doubling of cogeneration by 2010 can save up to 150 MtCO2 or about 5% of 1990 CO2 emissions.
5.Carbon emissions ceilings for power plants
The present CO2emissions of fossil fuel-fired power plants in the EU are too high and reflect an ageing plant stock and low power conversion efficiency of well below 40%. Compared to old coal-fired power stations with an efficiency of not more than 35%, new gas-fired power stations can reach an efficiency of up to 55% while even reducing the specific CO2emission by over 50%. The lifetime of power plants with efficiency of lower than 45% and CO2emissions higher than 400 g CO2 /kWh electricity should be limited to a maximum of 20 calendar years. New power stations therefore should have a power conversion efficiency of more than 45% and specific CO2 emissions lower than 400 g/kWh. CO2 saving potentials by 2010 may reach more than 200 MtCO2.
6.Measures in heavy industries
There is still a large potential in exploring energy efficiency in the heavy and energy-intensive industries, such as cement, iron and steel industry, refineries, basic chemical producers and the pulp and paper industry. Improvement rates of 2% per year are possible on technical and economic grounds. Mandatory EU-wide benchmarking technologies for these sectors can reduce CO2 emissions by approximately 100 MtCO2 by 2010.
- A framework Directive to stimulate end-use Energy Efficiency Services and Programmes in the Internal Electricity and Gas Markets
End-use energy efficiency services and programmes are an important element to make it easy for energy consumers to achieve the energy savings outlined for buildings, appliances, and heavy industry, but particularly for achieving additional energy efficiency in small and medium enterprises. Such a Directive should set electricity and gas saving targets for the Member States, leaving them freedom to choose the policy most adapted to their national electricity and gas market structure and regulation. Such a Directive would complete the internal electricity and gas markets, support the Directives on doubling renewables and co-generation at the demand side, and create a new market for energy service companies and energy companies that are changing towards energy service companies. Energy efficiency services and programmes are estimated to achieve savings of up to 230 million tonnes CO2 by 2010, if such a supportive framework is created[7]. They thus contribute an important part to the realisation of the emission reduction potential in buildings, and of efficient electric appliances. Particularly in small and medium sized enterprises (SMEs) and industries EE services and programmes will add further savings.
8.Efficient pricing and public transportation
While the need for decoupling transport from economic growth is gaining more and more acceptance in the Commission, the debate in the ECCP on transport measures has had an extremely limited ambition, and no mention of this fundamental requirement for tackling transport's impacts on the environment, is made. Accepting growth in transport volumes will inevitably result in transport continuing to be the only sector with strong growth rates in emissions. Measures such as awareness raising and extending the current voluntary agreements for fuel efficiency will only marginally reduce this trend. Policies are urgently needed to tackle the underlying driving forces behind transport’s GHG emission growth. Only a modal shift to environmentally friendly modes like rail will reduce emissions sufficiently. Emissions of GHG from rail transport are less than one third of comparable figures (per tkm) from road transport[8]. This will require a rapid implementation of fair and efficient pricing including a European kilometre charge for heavy goods vehicles and a framework for urban road pricing. This should be coupled with massively increased investments on public transports, facilitation of alternative fuels and high efficiency vehicles, as well as the promotion of walking and cycling. Depending on the amount of investment and introduction of renewable fuels, 100 – 200 MtCO2 can be saved in the transport sector.