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EU Climate and Energy Policy Package and Climate Policy developments until 2050 Mr Zsolt Lengyel, Team Leader & Ke

EU Climate and Energy Policy Package and Climate Policy developments until 2050 Mr Zsolt Lengyel, Team Leader & Key Expert 1 9 April 2014, Moscow. A competitive low carbon roadmap until 2050 . 2. Policy context: European Council 2011.

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EU Climate and Energy Policy Package and Climate Policy developments until 2050 Mr Zsolt Lengyel, Team Leader & Ke

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  1. EU Climate and Energy Policy Package and Climate Policy developments until 2050 Mr Zsolt Lengyel, Team Leader & Key Expert 1 9 April 2014, Moscow

  2. A competitive low carbon roadmap until 2050 2

  3. Policy context: European Council 2011 Science (IPCC) : global emissions to be reduced by -50% by 2050 compared to 1990 EU objective of reducing greenhouse gas emissions by 80-95% by 2050 compared to 1990, in the context of necessary reductions by developed countries as a group Need for a low carbon 2050 strategy providing certainty: predictability for longer term action Need to fix intermediary milestones (2030, 2040) towards reaching the 2050 objective

  4. The 2050 Low carbon economy roadmap in a nutshell: process Coordinated analytical framework (Europe 2020 Resource efficient Europe flagship initiative) Framework also used for sectoral initiatives, e.g. Transport 2050 White Paper Energy Roadmap 2050 Based on extensive economy-wide global and EU level model-based scenario analysis 4

  5. Global climate action EU objective: 80 to 95% reductions largely through domestic measures: • around -80% internal reductions in 2050 compared to 1990 Developed Countries: • similar effort Developing Countries: • -5% compared to 1990 • Equivalent to - 80% compared to business as usual • no cheap offsets by 2050 5

  6. The 2050 Low carbon economy roadmap in a nutshell: contents strategy responds to interlinked policy objectives: avoiding dangerous climate change, improving energy security overcoming barriers to the development of low carbon technologies which are at the heart of sustainable growth identifies cost-effective pathway, with intermediate milestones identifies key technologies guiding R&D identifies investments needs and benefits identifies opportunities and trade-offs guides EU, national and regional policies gives direction to private sector and private households for long term investments 6

  7. Cost-efficient EU pathway towards 2050 • 80% domestic GHG reduction in 2050 is feasible • with currently available technologies, • with behavioural change only induced through prices • If all economic sectors contribute (energy: 85%) Efficient pathway: -25% in 2020 -40% in 2030 -60% in 2040 7

  8. Energy Efficiency will be key Energy efficiency is the single most important contribution, especially until 2020 Current policies only result in 10% energy efficiency improvement roadmap confirms key role of efficiency up to 2020 and beyond efforts towards 20% efficiency target would deliver 25% GHG reduction ETS is one instrument to deliver additional efficiency 8

  9. Roadmap 2050:Investing in the EU economy Additional domestic investment: € 270 billion annually during 2010-2050, equivalent to 1.5% of GDP, of which built environment (buildings and appliances): € 75 bn transport (vehicles and infrastructure): € 150 bn power (electricity generation, grid): € 30 bn Note: Investment in the EU economy and EU jobs, not cost delaying action increases overall investment requirements R&D and early demonstration/deployment crucial 9

  10. Roadmap 2050:Benefits for EU economic growth Significant increase in domestic investment Shift from fuel costs to investment expenditure  money stays in the EU • Innovation in key growth sectors crucial for future competitiveness • GDP growth decoupled from GHG emissions also after 2020 • GDP more secure from energy price shocks 10

  11. Roadmap 2050: Benefits for EU energy security and air quality Fuel savings: € 175 to 320 billion on average annually during 2010-2050 (compared to € 270 billion investments) Primary energy consumption about 30% below 2005 without negatively affecting energy services Making EU economy more energy secure: Halves imports of oil and gas compared to today Saving € 400 billion of EU oil and gas import bill in 2050, equivalent to > 3% of today’s GDP Safeguard against macro-economic impacts of future energy price hikes Air quality and health benefits: € 27 billion in 2030 and € 88 billion in 2050 11

  12. Sources of new jobs Short term: e.g. in renovation of buildings, production of insulation materials, renewables industry Potential net job creation up to 1.5 million by 2020 if revenues from auctioning of ETS allowances and CO2 taxation are used to reduce labour costs and increase in investments and R&D Getting on track to achieve the 20% energy efficiency improvement in 2020 has the potential to boost net employment by 400,000 jobs. Long term job prospects depend on favourable economic framework conditions, e.g. expenditure on research & technology development, innovation, entrepreneurship, new skills, investment Roadmap 2050:Benefits for EU jobs 12

  13. Roadmaps of international competitors Several emerging economies (e.g. Korea, China, Brasil, India) develop low emission and green growth strategies Main drivers: innovation, leading in new growth sectors, energy security & resource efficiency, clean air For example: China’s 12th 5-Year Plan (2011-2015): increase carbon and energy intensity targets pilot emission trading systems develop low carbon zones invest 5 trillion yuan (€ 570 billion) in new energy increase renewable energy by 65% by 2015 invest 100 billion yuan (€11.5 billion) in alternative vehicles 13

  14. Roadmap 2050: the way forward Presidency conclusions and European Parliament responses on the Low carbon roadmap 2050 Member States, Candidate Countries and Potential Candidates to develop long-term national and regional low emission development strategies

  15. 2030 Framework 15

  16. Why consider 2030 Framework? • Investments today need long term horizon to avoid carbon lock in • Focus R&D and innovation activities in new growth sectors • Prepare for EU position in the international negotiations

  17. Main elements of 2030 package • A Communication on a policy framework for climate and energy in the period from 2020 to 2030 • A Communication and a report on Energy Prices and Costs for the European Council • A Recommendation on the safe and environmentally friendly exploitation of shale gas • A Communication on industrial policy "For a European industrial renaissance" http://ec.europa.eu/clima/policies/2030/index_en.htm

  18. The 2030 frameworkbuilds on the 2050 Roadmap 2050 Roadmaps 2030 Green Paper Proposal for the 2030 framework for climate and energy policies 2011 March 2013 January 2014 On-going discussions with Member States, EU institutions and stakeholders

  19. "No Regrets" options from the EnergyRoadmap 2050

  20. (Early) agreement on the 2030 frameworkis essential

  21. Security of energy supply Sustainability Competitiveness The 2030 framework must ensure progress towards three objectives Affordable and competitive prices Reduction of emissions Diversification of energy sources, supply countries and routes Promotion of new technologies, growth and jobs Reduction of energy consumption Grid Stability Improved energy efficiency Adequate energy infrastructures Development of alternative energy sources The 2030 policy framework takes into account lesson learnt from the 2020 framework and the economic and political context

  22. GHG emissions are decreasing in the EU compared to other countries • EU emissions reduced by 15.5% 1990 -2010 • EU GDP grew >40% • EU as a whole on track towards 20% target • For half of the MS, existing policies and measures are sufficient to reach their Effort Sharing target domestically Source: European Commission

  23. The EU is making good progress towards meeting the 2020 RES target - But most Member States are still some distance away Source: Eurostat Renewable sources accounted for 12.7% of the EU's energy consumption in 2010

  24. EU energy consumption is going down, but 2020 target likely to be missed with current policies projections Source: European Commission

  25. Challenges in meeting 2020 targets - to be considered in the 2030 framework

  26. Main issues considered in the 2030 framework

  27. Electricity prices – the US is increasing its advantage… Evolution of end-user electricity prices for industry (2005 = Index 100) Source: IEA, Energy Prices and Taxes, 4th quarter 2012

  28. …in part due to the shale gas boom - US wholesale prices for gas are 3-4 times lower than in the EU Source: European Commission 29

  29. Retail electricity prices paid by households and industry in 2012 Note: Euro/kWh, first half of 2012, consumption bands DC and IC, all taxes included Source of data: Eurostat

  30. Towards the 2015 Agreement 11/2010 Commission Communication "Energy 2020 Strategy" 12/ 2008 Heads of State and Government reached agreement on the package 03/ 2013 Adoption of the Energy Infrastructure Regulation 01/2007 Commission proposal for 2020 climate and energy package 12/2011 Commission Communication "Energy Roadmap 2050" 03/2013 2030 Green Paper 07/2009 Adoption of the 3rd package on the Liberalization of electricity and gas market More concrete proposals for the 2030 framework 10/2012 Adoption of the Energy Efficiency Directive 04/2009 Adoption of the Renewables Directive Window of opportunity 11/2012 Commission Communication "Internal Energy Market" 2015 Global Climate Change Agreement = EU legislation = Commission Communications = Council Counclusions

  31. How to contact us The project team can be contacted atpersonal e-mail addresses and : info@climaeast.eu Clima East Office c/o Milieu Ltd Rue Blanche n 15 1050 Brussels, Belgium The full project website is available in English and Russian: www.climaeast.eu

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