A 2030 framework for EU climate and energy policies

In the context of Europe's efforts to address climate change, the EU has three climate and energy policy targets for 2020 (20% emissions reductions, 20% of energy to come from renewable sources, and 20% energy savings), and a long term objective of 80-95% emissions reduction by 2050.

Achieving this long term objective requires substantial emissions reductions across all sectors of the economy, notably in the power sector, buildings, industry, and transport. Unlocking the investments required to achieve those emissions reductions requires a stable and predictable policy framework. With 2020 only a few years ahead, there is an urgent need to agree on a post-2020 framework for EU climate and energy policies.

The European Commission therefore recently made a proposal for a 2030 framework for climate and energy policies. This proposal builds on input received from stakeholders (governments, business associations, civil society organisations) throughout the public consultation, and is currently being discussed in the European Parliament and the Council with a view to reaching an agreement on the general framework. Once the general framework is agreed upon, the European Commission will propose measures and legislation to implement it.

In its 2030 framework proposal, the Commission suggested two targets for 2030: 40% emissions reductions and at last 27% of energy to come from renewable sources. However, it fell short of suggesting a third target for energy savings as under the 2020 framework, despite the vast remaining potential and its many recognised benefits. The emissions reduction target would be achieved by reducing the cap of emissions allowed under the EU Emissions Trading System (ETS) and setting national targets for sectors not covered by the ETS. On renewable energy, Member States would be free to set national renewable energy targets (unlike under the 20% target for 2020 where Member States have binding national targets), but it is unclear how the achievement of the overall 27% target will be ensured if the national targets don't add up.

The context in which the discussions on the 2030 framework are taking place is different from when the 2020 framework was discussed and agreed upon. Changes notably include the sluggish and fragile economic situation of most European countries following the financial and economic crisis, and the fall in US gas and electricity prices following the rapid development and penetration of unconventional fossil fuels such as shale gas.

As a consequence, the issues of cost-efficiency and competitiveness are getting more and more attention; a context that seems less favourable to meaningful action on climate change. At the same time, business as usual looks pretty gloomy if the estimated impacts and costs of inaction on climate change are taken into account. Is the proposed 2030 framework appropriate for Europe to address climate change in a cost-efficient manner while at the same time enhancing the competitiveness of the European economy?

By 2030 and under existing policies, EU emissions are expected to be reduced by 32%, and 24% of energy is expected to come from renewable sources. Although additional effort will be required to achieve the proposed targets, those are moderate compared to further efforts that would be required post 2030 to achieve the 2050 objective. This long term perspective must be taken into account if the issue of cost-efficiency is to be seriously addressed.

Furthermore, investments in Europe's ageing energy infrastructure, buildings, industry and transport systems are needed independently of the emissions reductions, energy mix and energy savings Europe is aiming for. Europe is therefore essentially faced with a long term investment choice and has the opportunity of embarking on a low emissions, high renewables and highly energy efficient economic development pathway. What better investment in the competitiveness of the European economy than reducing its exposure to increasingly costly, volatile and unstable fossil energy imports?

** The views expressed in this post are solely those of the author and do not necessarily reflect the views of EFTA, and the latter can not be considered in any way bound by them.