Thursday, 3 April 2008

EU's green energy plans

At the top of the EU's agenda is a new energy and climate change policy for Europe. Within the European Parliament there is an ongoing debate about how the EU can meet the challenges of climate change, ensure the security of Europe's energy supplies and boost European competitiveness. Given the global interdependency of Scotland's energy market Europe's new energy and climate change policies will have clear implications for Scotland’s energy industry and consumers, so it is vitally important to ensure that Scotland's distinctive energy challenges and opportunities are represented within this ongoing debate.

In January 2007 the European Commission published its first energy package outlining an
"Energy Policy for Europe" to combat climate change and boost the EU's energy security and competitiveness. This followed the launch of a wide-ranging public debate in 2006 on a future European energy strategy with the publication of a Green Paper in March 2006. Back in 2005 EU leaders asked the Commission to bring forward proposals for the development of a common European energy strategy following their discussions at the European Council in Hampton Court in October 2005 and in Brussels in December 2005 during the UK Presidency. Much of this was an attempt to get the EU out of its constitutional impasse following the rejection of the EU Constitution in the French and Dutch referenda and the reality that Europe needed to modernise through a refocusing of its efforts on issues of public concern such as jobs, globalisation, migration, climate change, etc.

The need for greater coordinated EU action was prompted by concerns about high energy prices, Europe's increased energy dependency on Russia and OPEC, recent gas disputes between Russia and Ukraine, new insecurities concerning long-term availability of coal, oil and gas reserves, growing energy demand and climate change. Central to the thinking was the need for the EU to speak with one voice on strategic energy issues on the global energy stage, to complete the single internal energy market and to move towards greater energy efficiency and a low carbon economy through the development of clean energy technologies.

The Commission's 2007 energy and climate change package would, according to the Commission, 'set the pace for a new global industralised revolution', and called on the Council and European Parliament to approve:
an independent EU commitment to achieve a reduction of at least 20% in greenhouse gas emissions by 2020 compared to 1990 levels
the objective of a binding commitment to a 30% reduction in emissions from developed countries (United States, Australia, Canada, etc) by 2020, subject to the conclusion of an international climate change agreement on the post-2012 Kyoto framework. The main result of the UN Climate Change Conference in Bali in December 2007 was a clear timetable with the deadline set for December 2009 in Copenhagen for the conclusion of an international agreement;
a mandatory EU target of 20% renewable energy by 2020 including a 10% biofuels target. The Parliament had initially supported a 25% renewable energy target.

This strategy was endorsed both by the
European Parliament and by EU leaders at the March 2007 European Council, both of which underlined the right of individual countries to determine how they use their energy resources. Agreement paved the way for a two year action plan to be implemented between 2007 and 2009.

The European Council invited the Commission to come forward with concrete proposals, including how efforts could be shared among Member States to achieve these targets. In response the Commission brought forward in November 2007 a
European strategy plan for accelerating the development and implementation of cutting edge low carbon energy technologies. On 23 January 2008 the Commission published a major energy and climate change package. Central to the proposed package are a set of legislative measures for implementing the "20 / 20 / 20 by 2020" targets (a 20% increase in energy efficiency, a 20% cut in greenhouse gases and a 20% share of renewables in total EU energy consumption, all by 2020.

These include key policy proposals for reforming the
EU Emissions Trading Scheme (ETS) for the period after 2013, the sharing of efforts to meet the EU's independent greenhouse gas reduction commitment in sectors not covered by the EU ETS (e.g. transport, buildings, services, smaller industrial installations, agriculture and waste), revised environmental state aid rules (which also now covers aid for carbon capture and storage projects). Of particular interest for Scotland are the Commission's plans for a new legislative framework for promoting the use of renewables as well as for the safe deployment of carbon capture and storage

The Commission's proposed package was approved by EU leaders at the
European Council in Brussels on 13 and 14 March. In an attempt to ensure the EU retains a key position in the international climate change negotiations, national governments want an agreement on the energy and climate change package by the end of 2008 with its adoption early in Spring 2009 at the very latest. While the EU is good at setting targets, whether the Member States can deliver to make these targets for cutting greenhouse gas emissions a reality will be a key challenge. The wrangles have begun and already it is clear that the Member States differ over how CO2 reduction and renewable energy efforts are to be divided between the different countries and there are concerns about the impact of climate change on the competitiveness of Europe's heavy industries. Issues were raised about the metal sectors such as steel, cement and aliminium being forced to relocate their operations outside Europe if countries with lower environmental standards don't adhere to Europe's strict environmental rules and the job losses this could result in - in Euro jargon, this is the issue of "carbon leakage". Following pressure from some of Europe's heavy industry, Member States like Germany secured safeguards from the Commission against any unfair competition from countries with lower environmental rules.

In the final conclusions, the Commission agreed to add the words: "The European Council recognises that in a global context of competitive markets, the risk of carbon leakage is a concern in certain sectors such as energy intensive industries particularly exposed to international competition that needs to be analysed and addressed urgently in the new ETS directive so that if international negotiations fail, appropriate measures can be taken."

Much of this seems to be part of the EU's fall-back strategy in case of failure to reach an international agreement. But if the EU is to be serious about its playing a leading role in the global fight against climate change and retain public credibility then it has to stand firm with its CO2 commitments that were agreed to by national governments despite the apparent back-tracking from some EU countries.

Then there are the Baltics, who fear that if their energy producers have to pay 100% of emission allowances, this would increase the price of electricity to such an extent that it would force companies to relocate or worse still force them to look to alternative sources of energy, not least Russia. So there are also issues of energy security to be considered.

All of this will be played out in the coming weeks and months. Discussions are now underway in the European Parliament's Energy and Environment Committees. Since the MEPs have the final say on the proposed package together with the national governments in the Council, the European Parliament is in a prime position.

With our vast renewable energy potential and as an important provider and supplier of energy, there is much Scotland can and should contribute to these discussions to ensure a sustainable energy future that is good for Scotland and good for the EU in the long term. Clearly for the SNP we want to see an Independent Scotland control its own energy future with Scotland's energy policy decided in Scotland and based on Scotland's own energy interests. It is therefore all the more important to ensure action taken by the EU on energy and climate change is based on maximum subsidiarity. Where there is added value from a coordinated EU approach to energy matters, such as strengthening Europe's voice on the international stage then intra-EU cooperation makes sense. But ultimate authority over national energy policies and national energy resources must remain with the appropriate domestic authorities. This is not only necessary under the principle of subsidiarity, it is also essential that as Europe's green energy powerhouse future EU energy and climate change policy must be suitable to Scotland's distinctive energy interests.

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