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Photo: MACIEJ NOSKOWSKI/E+/Getty Images
ENERGYPOLICY
20 July 2016 17:51

Analysis: How UK leaving the EU would increase climate targets for others

Simon Evans

Simon Evans

07.20.16
Simon Evans

Simon Evans

20.07.2016 | 5:51pm
EnergyPolicyAnalysis: How UK leaving the EU would increase climate targets for others

The European Commission has laid out proposals on dividing up 2030 emissions reduction goals for buildings, transport and agriculture.

The proposed 2030 Effort Sharing Regulation would allocate binding annual targets to each member state for sectors not covered by the EU Emissions Trading System (EU ETS). Countries would have to cut non-ETS emissions in 2030 by between zero and 40%, against 2005 levels.

Though uncertainty shrouds the UK’s future within the bloc following the Brexit vote, the proposal still includes the UK. It will also hand binding targets to Norway and Iceland, both non-EU member states.

Carbon Brief runs through the key points of the proposal and analyses what would happen if the UK were no longer part of the 2030 effort-sharing targets.

2030 targets

The EU has pledged to cut its greenhouse gas emissions in 2030 by at least 40% below 1990 levels. The ETS sector, including power stations and industry, will cut emissions in 2030 by 43% below 2005 levels (note the confusingly inconsistent base year). Non-ETS sectors, such as buildings and transport, will cut emissions in 2030 by 30% below 2005 levels.

The EU maintains that its 2030 target is in line with the goals of the Paris Agreement, which aims to keep temperature increases “well below 2C”. However, it has not changed its goal since Paris and Climate Action Tracker, a group of scientists and policy experts, says the EU’s pledge is “not yet sufficient” to be considered a fair share of global ambition.
Today’s proposal sets out how the 2030 non-ETS target of 30% below 2005 levels should be divided between the EU’s 28 (current) member states. The division of labour ranges from a 0% cut on 2005 levels for Bulgaria to a 40% reduction for Luxembourg and Sweden (see chart, below).

Proposed 2030 non-ETS emissions reduction targets for each EU member state, and the EU average. The reductions are relative to 2005 emissions. Source: European Commission. Chart by Carbon Brief.

Effort is shared out using two factors: first, countries with higher per-capita GDP are expected to do more; and, second, for those with above-average per-capita GDP, contributions are adjusted to reflect their cost-effective emissions-reduction potentials.

Broadly speaking, this division of labour means that the EU’s richest nations, including Sweden, Germany and the UK, are at the top end of ambition within the EU, while eastern European member states including Poland and Bulgaria, are at the bottom end.

When the non-ETS targets for 2020 were handed out, only GDP per-capita was taken into account. The 2020 targets are shown below.

Non-ETS emissions reduction targets for 2020 for each member state, and the EU average. The reductions are relative to 2005 emissions. Source: European Commission. Chart by Carbon Brief.

The new adjustment for cost-effective reduction potentials reduces the effort required by Ireland, Spain and Finland while increasing it for Germany. Changes in relative GDP since 2009 mean some countries, particularly Greece, will have less stringent targets for 2030 than they do for 2020.

Differences between proposed 2030 emissions reduction targets and what would have been expected if the 2020 division of labour had been repeated. Source: Carbon Brief analysis.

It’s important to note that the proposal sets annual limits for each year 2021-2029, in addition to the final-year target for 2030. These annual limits start in 2021 at the level of average emissions during 2016-2018, and then decline towards the 2030 goal along a linear path.

Flexibilities

Countries can bank over-achievement in one year, to be used against targets in future. They are also allowed to meet under-achievement by borrowing up to 5% of the next year’s allocation. Member states can trade up to 5% of a year’s allocation with other countries.

Today’s effort-sharing proposal introduces two new “flexibilities”, again designed to make it easier to meet the targets. The first allows nine member states, including Ireland, Finland and Denmark, to count up to 100m surplus carbon credits from the EU ETS against their non-ETS targets.

Where these credits are used, they must be cancelled. EU ETS campaigners have long called for some credits to be cancelled, in order to reduce a huge surplus that has held down CO2 prices.

The second new flexibility allows all member states to credit emissions reductions from land use, land-use change and forestry (LULUCF) against the non-ETS targets. This is a particularly controversial decision because of doubts over whether LULUCF reductions are permanent, and additional to what would have happened otherwise.

The main beneficiaries of these new flexibilities include Ireland, Denmark and Finland. All have large agriculture and forestry sectors.

Proposed non-ETS emissions reduction targets for each EU member state, and the EU average. Allowances for ETS and LULUCF flexibilities are shown where applicable All reductions are relative to 2005 emissions. Source: European Commission. Chart by Carbon Brief.

The Commission proposal says:

The new flexibilities from the ETS and the LULUCF sectors need to be limited to ensure that real additional action is still taken in the non ETS sectors in line with the long term reduction objectives.

NGOs go further and say that these new flexibilities are “loopholes” that will water down overall EU ambition. In a June letter, also pointing to loopholes, seven members of the European Parliament’s environment committee wrote:

In the context of the Paris Agreement and the on-going vehicle emissions scandal it would be extremely damaging to the EU’s credibility if the Commission were to propose a climate law that, already at its inception, is undermined by loopholes and poor compliance mechanisms.

Fern, an NGO specialising in forests, says the flexibilities weakens the EU’s 2030 target, watering it down from a 40% to a 39% reduction on 1990 levels.

Sandbag, an NGO covering EU climate policy, says the proposal amounts to no more than business as usual. It says that the 30% non-ETS target for 2030 is too low, with cost-effective savings amounting to a 50% cut. EU emissions are already comfortably below the 2020 target.

Brexit context

Today’s proposal arrives at a time of great uncertainty for the EU, triggered by the UK’s vote to leave the bloc. If the UK leaves the EU, it may still be bound by the 2030 effort-sharing decision, similarly to Norway and Iceland.

If the UK moves outside the 2030 target, however, its above-average share of effort will have to be divided among those that remain, or the target will have to be weakened.

Carbon Brief analysis suggests a UK departure would leave a 29m tonne hole in the non-ETS target of a 30% cut in 2030 emissions, against 2005 levels.

If shared equally, this emissions gap could be made up with a slightly more than one percentage point increase in targets: for instance, a 36% goal would increase to around 37%. In the absence of raised ambitions, the rest of the EU would have to water down its non-ETS goal to 29%.

The uncertainty over the UK’s future adds to the expected wrangle over the proposed 2030 targets.

Jonathan Gaventa, a director at E3G, a climate and energy policy thinktank, tells Carbon Brief:

It’s essentially a zero-sum game. Governments will be trying to get others to pick up effort as much as possible.

However, he adds that the fight over 2020 effort sharing appears to have diminished in importance, given that most member states are well ahead of their 2020 goals. As a result, six member states will be able to increase their non-ETS emissions between 2014 and 2030, according to Futureproof, a consultancy.

Today’s proposed 2030 effort-sharing decision is not final. Member state governments ministers and the European Parliament will have the chance to suggest changes, and must agree any amendments with the Commission.

Discussions had been expected to conclude during the second half of 2017, when the UK was to hold the rotating six-month presidency of the EU Council of Ministers. However, the UK has said it will not take up this role.

Paris Agreement

The process could also affect EU ratification of the Paris Agreement. Some member states, including the UK, had said they wanted to see the 2030 effort-sharing proposal before ratifying Paris. Now that the initial proposals have been published, it is possible the UK could move to ratify.

Baroness Neville-Rolfe, minister in the newly-formed Department for Business, Energy and Industrial Strategy, told parliament this week:

I can confirm that this government remains committed to ratifying the Paris agreement, which was agreed last year by 195 countries, as soon as possible.

Alongside today’s effort-sharing proposal, the Commission published a strategy for low-carbon mobility. It says the EU “needs to accelerate the transition towards low- and zero-emission vehicles”.

The strategy notes that vehicle batteries could become an integral part of electricity networks and that hydrogen and other synthetic fuels could be produced from electricity when prices are low, creating a form of energy storage.

The Commission also published consultations on monitoring, and eventually regulating emissions from heavy-duty vehicles, as well as on tightening standards for light-duty vehicles.

Notes: Carbon Brief analysed the impact of a UK departure using updated 2005 baseline emissions calculated by Futureproof, a consultancy. The updated baselines use the latest figures on overall emissions from the European Environment Agency and on ETS emissions. These baseline figures differ from those used for the 2020 effort-sharing decision, largely because the scope of the ETS has changed.

Main image: Blurred passengers waiting in underground station, long exposure. Photo: MACIEJ NOSKOWSKI/E+/Getty Images.

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