Two factors led the 27 EU leaders to approve the major elements of the bloc’s energy and climate package at the European Council on 12 December: the spirit of compromise and the UN climate talks, which were being held in parallel, in Poland. The outcome of the Council did not, however, resolve all outstanding issues; on the contrary, it marked the beginning of a long and extremely hard phase, during which the path to implementing the package needs to be laid down, both for individual member states and the EU as a whole.
There are four major problems related to the implementation of the package, which are of great importance to new member states. Those are:
- the EU15 and new EU member states have different legal statuses during the first commitment period of the Kyoto Protocol (2008–12) – this fact was widely ignored by the package;
- there are still huge differences in the wealth of member states;
- historic circumstances still define the economic landscape – explaining the insufficient diversification of energy sources; and
- there are several provisions and instruments in the package which constitute more of a political wish-list than an economically rational approach (a good example is carbon capture and storage, where there is still no evidence that it works and is safe).
For the 2013–20 period, the EU27 has planned to jointly meet its reduction commitment. As in the first Kyoto Protocol period, the efforts of new member states in meeting the target should also reflect their aspirations to catch up with the richest.
But the package assumes the differentiation of commitments only for sectors not covered by the EU Emissions Trading Scheme (ETS); all installations covered by the EU ETS have, in practice, the same target, with a total cap of 21% below 2005 emissions by 2020. This is the heart of the problem, especially when we look at numbers: for Poland, emissions from sectors covered by EU ETS amount to 60% of the country’s total GHG emissions, whereas the EU average is 40%.
A separate issue concerns the use of 2005 in setting the cap. Despite European Commission statements in January 2008 that 2005 was just a reference year and not the new base year, in reality it has become the base year. What the package does is treat the EU27 emission changes between 1990 and 2005 together, as if the EU was one country, and only from 2005 onwards does it consider the reduction possibilities of individual member states. This is clearly to the advantage of the old member states at the expense of the new ones.
The basic threshold to share the effort of implementing the package should be GDP per capita. The same holds true for the EU commitments within future international climate agreements. The package seeks to impose a single market on the EU, which is full of national circumstances and non-harmonised regulations. A solution for additional distortions thus created is the solidarity-based redistribution of auction revenues. But will the revenue-oriented mechanism deliver on its real goal, of reducing emissions?
The modernisation of old member states’ economies took several decades. The economies of new member states are only now transforming, following the economic collapse at the beginning of 1990, but this growth will be slowed down by the current global economic crisis (which the package does not consider).
The same holds true for the power sector. So far, the EU has not had any consistent energy strategy, which is desperately needed (let the January suspension in deliveries of Russian natural gas serve as a wakeup call). Such a strategy should be ambitious from the climate perspective, but at the same time it must guarantee energy security through a proper mix. The necessary investments need to be realised in a sustainable way (stable financing, bearable social costs, a realistic time horizon for construction and modernisation). No carbon market alone, even an ambitious one like the EU ETS, will deliver that.
Among the most affected by changes to the EU ETS from 2013 are member states relying on one energy source, such as Poland, which depends on domestic coal. This coal contributes significantly to enhanced EU energy security and cannot be replaced right now as the alternatives (natural gas, renewables, nuclear) have weaknesses, and diversification would take 15-20 years; any political acceleration of that process would not make sense.
The climate and energy package allows for a delayed introduction of auctioning for those member states with reliance on one energy source – that is however another “end of the pipeline” mechanism (similarly to redistribution of auction revenues). The derogation could offer some flexibility and reduce costs, but does not change the major problem, which is a 21% reduction on 2005 emissions in the EU ETS, independent of the legal status under the Kyoto Protocol.
The package has to be compatible with a future international agreement. The national emission reduction goals for 2013–20 have to be clearly set and need to take into account the national circumstances of individual member states. Emission reduction obligations should result from a pathway leading to equalising the GDP per capita levels towards the highest. They cannot be based on absolute emissions and impose commitments not consistent with feasible reduction possibilities.
Emissions trading should lead to optimal emission reduction decisions. It cannot act as a substitute for EU energy policy, but should become its important component. In this context, the EU ETS goals need to be linked to energy security challenges. In this way, we can force emission intensity improvements in industrial processes and in the broader context of the current and future energy mix.
Autorzy artykułu: Andrzej Błachowicz, Wojciech Jaworski
Źródło: Carbon Finance, February 2009Andrzej Blachowicz is an international cooperation manager at KASHUE (Poland’s ETS Authority) and served as government expert during the negotiations of the climate and energy package and at COP14 in Poznan. Wojciech Jaworski is a deputy director of the Institute of Environmental Protection in Warsaw and head of KASHUE. E-mails: andrzej.blachowicz@kashue.pl and wojciech.jaworski@kashue.pl
Disclaimer: The views in the article are of the authors and should not be associated with an official position of KASHUE or the Polish government.
