The leaders of the Member States of European Union agreed on the objectives of the EU climate policy by 2030 at the Brussels summit on October 23, 2014. The primary objective of this policy is to reduce greenhouse gas emissions in 2030 by at least 40% compared to 1990. In addition, the target for energy efficiency improvement defined as 27% reduction in demand in relation to forecasts and achievement of at least 27% share of renewable sources in total energy consumption. The justification stresses that achieving such defined objectives will make the European Union's economy, including its energy system, more competitive, while at the same time will increase the level of energy security and the effectiveness of combating climate change. The above climate policy objectives apply to the entire European Union, while at this stage, the detail and participation of Member States and economic sectors in their achievement are defined in various ways.
Fig. EU commitments until 2030 relative to the 2020 target
Source: KOBiZE
Reform and development of EU ETS
In the adopted form of climate policy, it is assumed that about half of the overall reduction effort will be made by the Emissions Trading System (EU ETS), which remains the basic EU instrument in this area. It is assumed that the reduction of greenhouse gas emissions covered by the EU ETS will reach 43% in comparison to the level of emissions in 2005. It should be noted that in the summit conclusions there is a clear reference to the reformed emissions trading system, which is a clear signal of support for the implementation of the proposed Market Stability Reserve (MSR). It is expected, that thanks to this solution the impact of other measures in the field of climate protection policy on the prices of emission allowances will be limited.
It was also decided that in order to protect the international competitive position of European companies, EU ETS would continue to allocate 100% of free allowances to sectors exposed to the risk of carbon leakage (CL).
For the first time, in the decisions of the political leaders of EU member states regarding climate policy indicated the need to take into account both direct and indirect emission costs (i.e. impact on energy prices). Previously, the problem of compensation for indirect effects was left to the Member States.
The conclusions also include a decision on financial support for poorer EU countries, which would be implemented mainly through three mechanisms. Firstly, for Member States where GDP per capita is below 60% of the EU average, a special fund is proposed to support the necessary additional investments in the energy sector. This fund would be created from revenues from the auction of allowances from a specially designated reserve covering 2% of the total EU ETS allowances. Distribution of resources from the fund among eligible Member States would be based equally on two criteria: 50% would be based on historical emissions and 50% on the basis of the GDP index. Project selection criteria are to be developed in the next stage, and the European Investment Bank will participate in the qualification procedure.
The second form of support for poorer Member States is additional emission allowances derived from the allocation of 10% of the auctioning pool. This means that in addition to the 90% of the auction cap allowances allocated according to the historical emissions criterion, Member States in which the GDP per capita ratio is lower than 90% of the EU average would receive additional allowances from this 10%. In addition, special support was granted to the power generation sector, allowing the award of up to 40% of free allowances in countries with GDP per capita below 60% of the EU average (40% of what they receive from the 90%). The support resulting from the above mechanisms will be particularly controlled so that it is transparently used for the modernization of the energy sector, and not simply for the support of installations burning fossil fuels.
Actions in the non-ETS
In the Council conclusions of October 2014, the issue of reduction efforts in economic sectors not covered by the EU ETS is treated less specifically. It was decided that in this area of impact of climate policy, the reduction of greenhouse gas emissions in 2030 will reach 30% in the entire European Union compared to the level from 2005. In the conclusions of the October summit the level of the emission limits was set, ranging from 0 to 40% emission reduction compared to 2005. In the conclusions there was also a provision on the admission of flexible mechanisms that would enable the transfer of some reduction targets between the EU ETS and the non-ETS sectors. This applies to some countries with high reduction costs and ineligible for granting free allowances.
Detailed provisions regarding the level of targets for individual countries and other mechanisms have been agreed within the so-called non-ETS regulation.
Energy efficiency and renewable energy sources
In 2018, the EU member states, European Commission and the Parliament revised decisions defining the climate policy targets in the field of improving energy efficiency and increasing the share of renewable energy sources in its final consumption. In the case of energy efficiency, the target was raised to 32.5%, and for RES to 32% (for comparison, the Conclusions from 2014 referred to the target of 27% for both cases).
Energy market integration
The decision on higher integration of the electricity market complements the provisions of the conclusions relevant for climate policy. Actions that would provide at least 10% of the capacity of cross-border energy connections in 2020 in each Member State (measured in relation to the power of the national electricity system) would be identified as urgent.
The decisions included in the European Council Conclusions of 23 October 2014 are general in nature and set only a general framework for future legislative solutions. Therefore, the information presented above are indicative and the final shape of future regulations will be the result of ongoing discussions within the European Union between Member States, with the participation of the European Commission and the European Parliament.