1

HotspotClimate & energy poliCy news

from europe

Climate action Network Europe

iSSUE Nº 65 JULY 2012

If the Commission is serious about boosting the EU’s low-carbon transition, withholding 1.4 billion emission allowances from Phase III of the EU ETS (2013-2020) is the correct response.

Capturing the true costs of the extraction and burning of fossil fuels should in theory change investment patterns and influence operational decisions within a business. Of course, this is dependent on having a scheme that is ambitious enough to boost clean investments, which is not the case for the EU Emissions Trading System (ETS). The continuing record low price of carbon in the ETS says it all. Supposedly the “cornerstone” of the EU’s climate policy, it is not ambitious enough to reach 2050 climate targets (80-95% emissions reductions), nor is the scheme robust enough to stimulate green investments.

To solve this problem, the Commission’s forthcoming first annual ETS report needs firstly to propose a delay (backloading) in the auctioning of at least 1.4 billion allowances from the first years of the EU ETS Phase III to the later. But to truly spur on clean investment, further steps will need to be taken. “Strengthening the European Union emissions trading scheme and raising climate ambition,“ a new report developed by Öko-Institut for Greenpeace and WWF, warns that without adequate intervention, the EU ETS will remain

oversupplied with pollution permits for another 12 years [1]. The report concludes that all allowances removed from the early years of the third ETS trading period need to be either cancelled or reintroduced only after at least a decade. The Commission’s plan to ‘backload’ allowances must be accompanied by proposals on how to permanently fix the scheme to ensure it effectively deters high-carbon infrastructure and projects.

However, it is not just NGOs that are pointing out that a fundamental intervention in the carbon market is urgently needed. Big business representatives like Statoil, Shell and E.ON have also called on the Commission to propose long-term predictable measures that will strengthen the scheme. Green investors’ confidence in the EU’s commitment to follow a low-carbon transition pathway has to be restored in order to avoid an economically costly and environmentally dangerous high-carbon lock-in.

The low carbon price is worrying the European Parliament and 26 out of the 27 European Environment Ministers. The Cyprus EU Presidency and German Chancellor Angela Merkel are others who are voicing their concerns. The Polish Minister of the Environment, Marcin Korolec seems to be the only one who is

eTS: To drive or not to drive clean investments? BY JULia MiCHaLaK, CaN EUROPE POLiCY OFFiCER

In this issue

p.1eTS: To drIve or noT To drIve clean InveSTmenTS?

p.2rIo round up:

THe FuTure We WanT?

p.3energy eFFIcIency: a deal, buT noT a Super one.

p.4Welcome To can europe

>> Continue on p.2

2

eu polIcy FocuS on June 6 the Commission released their renewable energy strategy (res). the document focuses on the short-term implementation of renewables in the power market, but fails to properly address the heating and cooling sector, as well as transport. member states will now give their pronouncements on the strategy before the next energy Council due to be held by the Cyprus presidency in october.

Rio+20 was supposed to produce a clear vision and plan, ‘The Future We Want’, for how to move action on sustainable development forward across the globe. World leaders failed miserably in their weak efforts to produce a document to guide sustainable development for the coming years. Our planet faces simultaneous climate, biodiversity, water and equity crises, just as the population continues to balloon, but apparently our leaders aren’t feeling the urgency. The lack of both transparency and ambition in Rio prompted CAN International Director Wael Hmaidan to address leaders, ministers and negotiators at the beginning of the high-level part of the summit, stating:

“You cannot have a document entitled ‘The Future We Want’ without any mention of planetary boundaries, tipping points, or the Earth’s carrying capacity. The text as it stands is completely out of touch with reality. Just to be clear, NGOs here in Rio in no way endorse this document.”

Thousands of organisations and individuals also signed a petition called ‘The Future We Don’t Want’, making clear the vision and agenda that world leaders were pursuing was unacceptable to civil society.

Not surprisingly, leaders failed to listen or act in their own peoples’ interest. Kumi Naidoo, Director of Greenpeace International stated:“Governments have failed to produce the historic deal we need to address the perfect storm of crises: of equity, ecology and economy. We didn’t get the future we want in Rio, because we do not have the leaders we need.” No member of civil society came away feeling

positive about the outcomes at Rio, but the frustration at the lack of ambition and action by the majority of governments and leaders was contrasted by a resolve to move forward.

Some are now calling for targeted action against the malign influence of corporations on the international political process. Others such as Kit Vaughan from CARE International, argued for support of bottom up initiatives. “Millions of poor women and men now have to pick up the pieces from the mess world leaders left behind here in Rio.” He concluded, “Local communities all around the world are already taking action to manage their natural resources and live a sustainable life. The short-sightedness of world leaders demonstrated here in Rio means that we, as civil society, have to put everything we can in to catalyzing these local initiatives.”

Despite the seemingly hopeless and

lackluster outcome of Rio+20 there is a small chance that some positives can come out of the process itself. Leaders committed to creating a new set of sustainable development goals (SDGs). These should set the direction of global development work from 2015. “The SDGs could help make global food production more sustainable and ensure that many millions more people can enjoy clean water and sustainable, modern energy. But this will only happen if citizens keep up the pressure as work to shape the goals continues,” remarked Alison Doig, Senior Advisor on Sustainable Development, Christian Aid

Many concluded that Rio will be seen as an historic failure to act on the global human and environmental disasters that we are facing. Perhaps this will be the case, but maybe it will also be a moment that sparks people into renewed action as the realiza- tion of our leaders’ failure hits home. n

HOTSPOT NEWSLETTER Nº 65

rio round up: The Future We Want? BY WENdEL TRiO, CaN-EUROPE diRECTOR

JULY 2012

satisfied that the price of allowances is falling below 10 euros.

The financial crisis made it clear that markets need guidance and the EU ETS is not an exception. Christine Lagarde, director of the IMF, recently stated that an effective carbon price is needed to tackle not only the environmental crises but also economic and social ones too.

CAN-Europe is calling on the Commission

to come up with a bold plan to address the failing carbon market. This should seek to delay the auctioning of at least 1.4 billion ETS allowances, with the intention of permanently withholding them from the market at a later date. On top of that, the Commission should propose a steeper reduction in the number of allowances to be auctioned each year. The easiest way to achieve this would be to increase the EU’s

emission reduction target to at least 30% by 2020.

So will the Commission make an ambitious proposal? Will Member States show commitment to supporting the EU ETS as the main tool to cost-effectively achieve 80-95% emission reductions by 2050? We will be waiting and watching to see what happens! n

>> Continued from p.1, ETS: To drive or not to drive clean investments?

[1] Greenpeace, WWF. “Strengthening the European union emissions trading scheme and raising climate ambition”, http://www.greenpeace.org/eu-unit/en/Publications/2012/ETS-report/

3

eu polIcy FocuS the Commission is due to release a report on the emissions trading system (ets) before the end of July. It will offer two different proposals for fixing the low price of carbon. CAN Europe would expect to see a structural intervention into the eu ets market forming part of any effective proposal.

On Thursday June 14 all three branches of EU government reached agreement on the Energy Effficiency Directive (EED). Formal adoption will be completed later this year.

The final deal is an improvement compared to earlier versions proposed by Member States, but falls a long way short of the ambition required to meet the EU’s 20% target. The Coalition for Energy Savings estimates that the Directive will deliver just 15% savings by 2020 compared to business as usual. Member States are thus set to deny themselves many of the potential benefits that a stronger directive would have brought. It seems that opposition to reducing energy waste, and a failure to see the bigger picture, have prevented a truly ambitious agreement from materializing.

Nevertheless, it is an important step forward in realizing the potential of energy savings in the fight against climate change, and should inspire other countries in the world to take action on energy effficiency., All of this has been made possible thanks to the invaluable hard work of members and allies of CAN-Europe. A special mention must go to Energy Savings Man, who made a final appearance in a short spoof film trailer, urging people across Europe to be energy heroes and calling out the Member States that were blocking progress. 1

Perhaps the most revolutionary achievement of this Directive is that – for the first time ever - it puts a precise definition of the 20% by 2020 target into legal text. Specifically, , the EU’s energy use in 2020 must not exceed 1474 million tons of oil equivalent (Mtoe) of primary energy, or 1078 Mtoe of final energy (energy after transformation from its raw form). To put this into context, China’s primary energy consumption in 2004 was 1379 Mtoe; in 2009 it was 2270 Mtoe.

Regrettably however, despite the best efforts of the European Parliament, the Directive

does not require legally binding overall national targets. This is the one thing that past experience tells us would have given the best chance of the 20% target being met. Instead, Member States must adopt indicative, i.e., voluntary, targets. In 2014 the Commission will review progress towards the 2020 target and if necessary they will propose further measures to ensure the target is met.

Member States must also establish schemes that will oblige energy companies or distributors to deliver cumulative annual energy savings equivalent to 1.5% of the previous year’s final energy sales. These will help to establish clear financing and delivery mechanisms for energy effficiency measures, whilst inducing a shift in the business models of energy companies towards the provision of energy services, and not just selling large amounts of energy.

Unfortunately, this provision is much weaker than originally intended: energy sold to transport is excluded, and Member States managed to introduce a wide range of loopholes which, taken together, effectively reduce the savings rate to more like 1%.

Member States’ desire to diminish the impact of the Directive also resulted in the 3% annual renovation rate for public buildings being squeezed to only cover central government buildings. Provisions on public procurement, industrial audits and combined heat and power generation are now also little more than voluntary.

On the other hand, the Parliament managed to win some important amendments in at least three areas.

First, whereas the Commission’s proposal included no direct provisions addressing the EU’s residential and commercial buildings, the final text requires Member States to prepare long-term “renovation roadmaps” for their entire building stock.

Second, Member States are obliged to facilitate the establishment of ‘financing facilities’, designed to raise money for energy efficiency purposes and to help ensure that it is spent effectively.

Finally, the Parliament also managed to secure a written statement from the European Commission which details the

steps it will take to make adjustments to the EU’s Emissions Trading System to take account of the EED’s emission-reducing impacts.

Marks of the NGO effort to obtain the strongest possible Directive are clear in many places. For instance the fact that the 2014 review must now be accompanied by – and not just ‘followed by’ - proposals for further measures; the clear expression of the savings rate to be delivered by energy company obligations, and the introduction of new concepts like the renovation roadmaps and financing facilities.

But of course, any Directive is only as good as the way it is transposed into national law, and implemented on the ground. As a network we will now be working hard to ensure that this is done as ambitiously and as effectively as possible – and also to make sure that whatever comes forward in 2014 will actually deliver the 20% target. n

HOTSPOT NEWSLETTER Nº 65

energy efficiency: a deal, but not a super one.BY ERiCa HOPE, CaN-EUROPE SENiOR POLiCY OFFiCER

Saving energy: bringing down Europe’s energy prices. in June, Can europe and friends of the earth europe published a new report, prepared by ecofys, that reviewed additional potential savings that could be made as a result of energy efficiency measures. it concludes that for every euro saved through reduced energy use, businesses and consumers save an additional Euro as energy efficiency measures drive down energy prices. you can download the report here. http://bit.ly/oneeuroforoneeuro

in may Can europe and partners published a ‘A recipe for transparent climate finance in the EU’ which provides an overview of what works and what doesn’t in the eu’s proposed new mechanism for monitoring and reporting (mmr) regulation.the report points out important questions that need to be asked - and answered - before the mmr legislation is finalized. It also provides recommendations on how to improve the legislative proposal - a recipe for transparent climate finance. http://bit.ly/Climatefinancerecipe

neW publIcaTIonS

JULY 2012

1 http://bit.ly/ESMReturns

4

JULY 2012HOTSPOT NEWSLETTER Nº 65

calendar Jul 26: ECOFIN Council Budget meeting

Aug 30 - Sep 5: UNFCCC Intersessional meeting, Bangkok

Oct 16-17: CAN Europe General Assembly, Brussels

HotspotPublished by Climate Action Network (CAN) Europe, the European office of CAN- a global coalition of over 750 NGOs working to halt the most dangerous effects of climate change.

CAN Europe promotes action to limit human-induced climate change to ecologically sustainable levels. CAN Europe represents over 150 members in 27 European countries, including most EU member states.

CAN Europe gratefully acknowledges support from the European Commission

Newsletter staff

editor responsible Wendel Trio

editor in Chief Vanessa Bulkacz

sub-editor Matthew Keys

subscriptions Email matthew[a]caneurope.org or subscribe via the CAN Europe website at www.caneurope.org, or via mail:

HOtsPOt Newsletter CAN Europe Mundo B, 4th Floor Rue d’Edimbourg 26 1050 Brussels BELGIUM

HOTSPOT is also available online at www.caneurope.org

Photo creditsp.1 MACHINAS/Paweł Oborski p.2 C.Schubert CCAFSp.3 Ellard Vassen/ CAN-EuropeAll other photos courtesy CAN Europe or creative commons licensing.

Layout: www.beelzePub.com

Views expressed do not automatically reflect the policies or positions of CAN-Europe

Welcome to can europe

During our spring general assembly CAN-Europe welcomed two new organisations to the network. Misereor has worked for 50 years to eradicate poverty and works with local partners in the global south as well as in Europe. In contrast, the UK Youth Climate Coalition was only established in 2008, but has quickly become an active and prominant participant at both national and international climate negotiations. Find out more about the organisations and their work below.

BY SaRaH aRNOLd, UKYCCC

The UK Youth Climate Coalition is a group of volunteers from the UK that is owned, run and managed exclusively by young people, mostly aged between 16-25. We work to inspire, empower, mobilise and unite young people to take positive action on climate change. We believe that we can

make a change by educating and supporting our peers so that we can all demand the future we need from our governments, as well as working together from the bottom-up.

We have sent delegations to every UNFCCC COP since Poznan in 2008, and have been supporting other young NGOs whilst there. We always work to provide the perspective of what science demands rather than starting from a position of political feasibility: campaigning for ourselves but also for youth all over the world and for future generations too. Recently, we developed a series of fun online modules (bit.ly/understandUNclimate) to inform our peers on how the often-complicated UNFCCC process works. Currently, we are in the process of obtaining funding to distribute these as far and as wide as possible.

We also work on a regional, national and local level, with Push Europe (pusheurope.eu) and through our Youth for Green Jobs campaign (youthforgreenjobs.ukycc.org/blog). We provide a young, fresh perspective on the climate debate, but we also have the ability and the expertise to really inform and empower our peers. We are excited to join the CAN-Europe network. ukycc.org

BY aNiKa SCHROEdER, MiSEREOR CLiMaTE CHaNGE aNd dEVELOPMENT OFFiCER

MISEREOR is the German Catholic Bishops’ Organisation for Development Cooperation. For over 50 years MISEREOR has been committed to fighting poverty in Africa, Asia and Latin America.

MISEREOR’s support is available to any human being in need – regardless of their religion, ethnicity or gender.

Changes cannot be prescribed from outside and because of this MISEREOR believes in supporting initiatives driven and owned by the poor and disadvantaged.

MISEREOR not only supports projects in the countries of the South. We are also committed to serving the poor by acting as their voice and advocate in Germany. Our objective: to promote responsible policies and a responsible way of life in Germany that take the needs and interests of the poor in developing countries into account.

The project “Climate change and justice. Climate policy as a component of fair globalisation and sustainable poverty reduction” sets out to analyse the interactions between preventing hazardous climate change and reducing global poverty. The objective is to develop suitable strategies and options for global climate and energy policy which will support rather than undermine national and international efforts towards poverty reduction.

Due to the complexity of the issues, this project is not simply concerned with compiling a study or a book. Its priority is to come up, as much as possible, with specific and concrete recommendations and options for action. This presupposes dialogue with representatives from other countries and cultures. From the outset, it also hopes to gain the widest possible public attention by engaging in a broad-based dialogue between research, business, church-based actors, civil society and policymakers. www.misereor.de n