Brussels, 15/10/2008 (Agence Europe) - Despite the current financial tailspin, the intense desire of the European Commission for EU heads of state to endorse the objectives of the EU's energy and climate legal package for 2020 set out in March 2007 (cutting greenhouse gas emissions by at least 20% on 1990 levels, renewable energy accounting for 20% of total energy consumption and 20% energy efficiency) matches the French Presidency of the EU's desire to get the package signed by the end of the year, come what may, in time for the UN post-2012 climate talks in Poznan, Poland, on 1-12 December 2008 (known at the COP14 talks). Both agree that it is the flexibility in the measures that will make it possible to reconcile two demands - preserving the environment and an ambitious package to allow the EU to keep its poll position in global climate change talks, thus helping ensure a global agreement in Copenhagen, Denmark, in December 2009 (COP15); and answering member states' and industry's concerns about the impact of the raft of unprecedented measures on EU competitiveness, industry and jobs. If no international deal is forthcoming, it has already been agreed that protection measures will be introduced for the most gas-guzzling industries that will be exposed to international competition, in order to guarantee an even playing field for all. The French Presidency has brought the timetable for action forward a year to ensure that quantitative and qualitative criteria can be decided in 2008 for vulnerable industries and for measures to come into force in 2010 (allocation of free quotas and the border adjustment mechanisms).
Working flat-out to find the compromises that will be required to ensure agreement in first reading at the European Parliament and Council in December on the four items of legislation in the package (revising and extending the carbon trading system ETS, member states' pooling efforts for non-ETS industries like transport, urban heating and farming, the legal framework for geological carbon capture and storage, and promotion of renewable energy), the French Presidency has drawn up guidelines for the European Council in order to iron out at the highest political level the few remaining thorny issues still to be agreed upon, given that no member state is challenging the objectives themselves. Instead, they are concerned with how to reach them in a sensible, cost efficient manner, explained a French Presidency source. It is hoped that the guidelines will ease the fears of some countries, like Italy (which has decided to veto the deal to make countries pause for thought), Poland and Germany. The guidelines urge heads of state to endorse the package's objectives (firmly backed by Scandinavian countries, Belgium, Spain, the Netherlands, Portugal and the United Kingdom) and the European Parliament's environment committee. The French Presidency guidelines will serve as a guide for work in the weeks to come and cover:
Revising the ETS. The percentage of emissions permits to be auctioned off in manufacturing industry, which is not subject to significant carbon loss due to relocation, would start at 20% and gradually increase to 100% in 2020 (the EP's environment committee suggests starting at 15%).
The percentage of emissions permits to be auctioned off in the energy industry would generally be 100% of quotas from 2013 onwards, as the Commission suggested, but the French Presidency is prepared to examine whether a derogation might be feasible on a case by case basis for specific situations where there is insufficient integration in the EU electricity market. (The Commission believes that the auctions will not impact on energy prices but some countries are calling for derogations. Poland in particular is refusing point blank to agree to the idea of 100% payable quotas due to the risk of a resulting hike in electricity prices, and is calling for volatility on the carbon market to be monitored.)
How monies raised at auction would be spent will be left for the Member States to decide but the income should be used to help cut greenhouse gas emissions and cut carbon emissions in energy, but it would be a good idea for the Council and Commission to look at how other EU instruments could be used in the move towards a lower carbon economy.
Sharing the burden. To make it easier to draw up national targets, carbon trading should be authorised among member states that have not reached their target and member states close to overshoot. The clean development mechanism and joint implementation should be boosted, and the rights to emissions trade-offs from investing in clean development outside the EU should be tradable among EU member states.
Renewable energy. Indicative national trajectories and the member states' cooperation mechanism should be used to achieve national targets.
Carbon capture and storage. Carbon capture and storage should be covered by rules and environmentally-friendly techniques, and the 12 demonstration projects must receive sufficient funding from governments in addition to private funding. (A.N./trans fl)