ENVIRONMENTAL DIMENSION
OF THE EEP – CLIMATE CHANGE
MITIGATION
Filip Černoch
cernoch@mail.muni.cz
Period between 1985 - 2000
 New incentives for energy on the EC level
 Weak competitiveness of European industry
– first proposals to create the internal energy
market. Competition and transparency
instead of national monopolies and closed
markets.
 Climate change – tools to prevent impact of
usage of energy on local and global level. (to
reduce the amount of emissions produced in
the EU)
 Disintegration of Soviet block – proposals to
manage relations between producents and
consumers (EU MS) of energy.
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Environmental impacts of energy consumption
 Energy sector (extraction, transport, processing and combustion) harms the
environment significantly.
 Local environment protection – covered mainly by Environmental
policy
 Air, land and water pollution, noice
 Industrial (energy) waste
 Protection of biodiversity
 Extraction of non-conventional sources of energy
 …
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Environmental impacts of energy consumption
 Climate change (regional/global level) – measures to reduce GHG
emissions
 EU ETS
 RES
 Energy efficiency
 Research and development, new technologies (CCS)
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Greenhouse gas effect
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Carbon cycle
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Impacts of climate change
 Confusion of the global ecosystem
 change of temperature (+0,8°C in the last 100 years) results in changes of
weather paterns
 Redistribution of water and growing conditions
 Places historically having great growing weather conditions are turned to
wastelands. Famine, war, climate refugees.
 Sea level rise – displacement and extinction
 The largest countries in the world like Bangladesh, Vietnam, India and China, all have very
high amount of population living in the very low line level urban areas.
 Ocean acidification
 Lowering the PH of oceans (CO2 is water soluble) is not acceptable for
many species.
 And the others……
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International regime to fight climate change
 Intergovernmental Panel on Climate Change – 1988.
= to provide comprehensive scientific assessments of current scientific, technical and socioeconomic
information about the risk of climate change, its potential environmental and
socio-economic consequences and possible options for adaptin to these consequences or
mitigating the effects.
 Rio Summit on Earth – 1992 (UN conference on environment
and development) → UNFCCC
 Kyoto protocol
 – 1997, in force 2005
= Existence of a generally accepted consensus on the climate change as
well as the contribution of human activities to this process.
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Kyoto protocol
 4 GHG (carbon dioxide, methane, nitrous oxide, sulphur
haxafluoride) + hydrofluorocarbons and pefluorocarbons.
 Annex I. countries (37 industrialized countries + EU15), Nonannex
I. parties.
 Reducing of GHG emissions by 5,2 % for the period of 2008-
2012. (4,2 % after USA left). Base year 1990.
 Flexible mechanisms – Emission trading, CDM, JI.
 Art. 4 – burden sharing agreement
 Common but differenciated responsibility
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EU and climate change
 Environmental awarenes
 Preemptive environmental measures
 Common market
 Raison d'être
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130r (TEU) „…Community policy
on the environment…shall be based
on the precautionary principle and on
the principles that preventive action
should be taken, that environmental
damage should as a priority be
rectified as source and that the
polluter should pay“.
Key data (2012)
 CO2 emissions from fuel combustion: -13,8% since 1990.
 Emissions by source: oil 40,2%, coal 32,4%, natural gas 25,6%, other
1,8%.
 Emissions by sector: power generation 37,5%, transport 24,6%,
industry 15%, residential 11,5%, commercial and other services
6,6%, other energy industries 4,8%.
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EU and climate change: carbon tax
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EU and climate change: emission trading
 ET: Central authority … sets a limit …on the amount of pollutant
to be emitted … the cap is sold/allocated …. as permits
….companies are required to hold those permits …if they need to
increase this volume…have to buy those premits.
 = the buyer is paying a charge for polution = he is motivated to
invest in less-poluting technologies.
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EU and climate change: emission trading
 How the system works?
 It creates a dynamic monetary incentive so companies can sell their
allowances to other producers and make profit
 This incentives are based on real needs (scarcity) of allowances and on
adequate monitoring and enforcement
 This system (at least in theory) offer certainity of emission reduction
corresponding to the stringency of the cap.
 Unlike domestric schemes effective international systems are more difficult to
establish
 Even a well-designed system is not to work if it is not implemented correctly
by the participants in the system (MS).
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Run-up to the EU ETS
 1988 EC´s communication „The Greenhouse Effect and the
Community“
 1998 EC´s communication „Climate Change - Towards an EU
post-Kyoto strategy“
 1999 EC´s communication „Preparing for Implementation of the
Kyoto Protocol“
 2001 – EU ETS legal preparation launched, approved in 2003.
 Designated the first period from 1.1.2005 to 31.12.2007, covering
about 11.500 facilities in 25 MS = 45% CO2 emitted in the EU.
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EU and climate change: emission trading

 EU firstly sceptical about international emission trading.
 See the very concept morally wrong – trading authorizes pollution, turning it
into commodity to be bought and sold
 Questionable with regard to equity – that the richer industrialized countries
can buy their way out of their obligations instead of lowering their
disproportionate consumption of scarce sources
 But – change in the possition of the U.S. placed the EU in
the forefront of the climate change movement
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Environmental dimension of EEP
 Climate change – EU aim to develop a low-carbon economy
 Measures primarily to reduce GHG emissions
 EU ETS – covers 40% of EU emissions
 individual targets of MS for the non-EU ETS sectors (housing,
agriculture, transport, waste) – cover 60% of EU emissions
 CCS
 Measures to transform the energy sectors
 RES
 Energy Efficiency
 Research and development, new technologies
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EU ETS: The first phase 2005 - 2007
 Problems with the decentralised system of distribution
 Drop in the prices of allowances
 Very limited impact on emissions of GHG
 NAP – only Austria, Denmark, Finland, Germany, Ireland and Slovenia in time
 Overestimation of emissions – with the exeption of Germany and Slovenia (4 %
surplus)
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EU ETS: The first phase 2005 - 2007
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Difficult calculations due to:
- Proneness to cheating
- Changing level of industrial production
- Changes in energy prices
- Increasing deployment of RES
- Permit stockpiling
- Weather
- The supply of permits associated with other EU targets
EU ETS: The first phase 2005 - 2007
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Country Mil. EUA Share of the overal
amount of EUA
Number of incl. facilities The aim of
Kyoto
Belgium 188,8 2,9 363 -7,5
Czech Republic 292,8 4,4 435 -8
Denemark 100,5 1,5 378 -21
Estonia 56,85 0,9 43 -8
Finland 136,5 2,1 535 0
France 469,5 7,1 1 172 0
Ireland 67 1 143 +13
Italy 697,5 10,6 1 240 -6,5
Cyprus 16,98 0,3 13 Luxembourg
10,07 0,2 19 -28
Lithuania 36,8 0,6 93 -8
Latvia 13,7 0,2 95 -8
Zdroj: Massai, 2012, s. 174
EU ETS: The second phase 2008 - 2012
 Considerably more rigorous approach of EC – cuts of NAP
(litigation at ECJ)
 Relativelly stable price of allowances
 Pressure to change the whole system
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Nearly all 25 EU MS did not meet the 30
June 2006 deadline for the submission of the
second phase NAPs (only Estonia was on
time). Preinfringement letters were sent by the
EC to 14 MS, namely Austria, Belgium,
Cyprus, the Czech Republic, Denmark,
Finland, Hungary, Latvia, Malta, the
Netherlands, Portugal, Slovenia, Slovakia and
Sweden.
EU ETS: The second phase 2008 - 2012
 Beween 2008 – 2012 the CO2 price decline from around €20 MtCO2 to
around €8 MtCO2.
 The reduction of energy demand due to the financial and economic crisis
starting in 2008.
 Inflow of international credits (Certified Emission Reduction CER of CDM and
others)
 Current cap and 1,74% annual linear reduction factor not sufficient
 Impact of other EU policies such as RES and energy efficiency policy
 Rising prices of fuels
 The design of the EU ETS doesn´t allow the adjustment of supply of EUA in
reaction to the changes in demand
 Since the banking is allowed between the second and third trading period
= a likely surplus of 2-2,5 bn EUA.
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EU ETS: The third phase 2013 - 2020
 Changes introduced by Energy and climate package 2009
 Increased coverage of GHG (CO2+nitrous oxide NO2 and
perfluorocarbons PFCs) and activites (airlines)
 Power and heat generation
 Energy intensive industry, such as oil refineries, steel works,
production of iron, aluminium, metals, cement, lime, glass, ceramics,
pulp, paper, cardboard, acids, bulk organic chemicals.
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EU ETS: The third phase 2013 - 2020
 EU-wide emission cap to replace NAPs. A linear reduction
factor of -1,74 %/y applies.
 Auctioning of permits as a default method. More than 40% of
EUA to be auctioned in the first year of 3rd period with
progressively rising shares each year.
 End of free permits to the power sector. In other sector the
progresive transition to the auctioning.
 In other sectors the transition to auctioning is taking place
progressively. In aviation sector only 15% of aviation
allowances will be auctioned over the whole 2013-2020
period.
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EU ETS: The third phase 2013 - 2020
 Common auctioning platform for the sale of permits (exept
Germany, UK, Poland)
 300 million EUA in the New Entrants Reserve to fund
innovative RES technologies and CCS.
 An expanded list of restrictions on the use of credits from the
CDM.
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EU ETS: The third phase 2013 - 2020
 Distribution of auction revenues (88 % to MS, 10 to MS with
low per capita income and 2 % to MS that had achieved a 20
% emission reduction in their Kyoto protocol base by 2005).
 At least half of revenues to combat climate change.
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Exeptions and derogations
 Countries, producing more than 60% of their
electricity from coal or poorly interconnected to
European grid could provide up to half of the
allowances in energy sector freely
 Bulgaria, Cyprus, Czech Republic, Estonia, Hungary,
Lithuania, Poland and Romania
 A risk of carbon leakage
 Process industries may get part or, if subject to carbon
leakage, all of their EUA for free at the level of harmonized
industry best practice practice.
 Carbon leakage list to be published every 5 years (2009,
2014).
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EU ETS: Latest development
 At the end of 2nd period another 900 mil. EUA.
 +the selling of left-over allowances in national phase 2 new entrant
reserves
 + early auctioning to meet sector hedging demand
 + the forward selling of phase 3 allowances to generate funds for the
NER300 program
 About 2 – 2,2bn of EUAs surplus
 Backloading: delaying the auctioning of emission allowances
intended to be allocated in 2013-2015 until 2018-2020
 Market Stability Reserve (from 2021) – to address the surplus
of EUAs by automatically adjusting the supply of EUAs to be
auctioned.
 Change of the linear factor to -2,2% from 2021.
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Environmental dimension of EEP
 Climate change – EU aim to develop a low-carbon economy
 Measures primarily to reduce GHG emissions
 EU ETS – covers 40% of EU emissions
 individual targets of MS for the non-EU ETS sectors (housing,
agriculture, transport, waste) – cover 60% of EU emissions
 CCS
 Measures to transform the energy sectors
 RES
 Energy Efficiency
 Research and development, new technologies
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Non-EU ETS emissions
 National targets for non-EU ETS
emissions
 Traffic management, low-GHG
transport, biofuels, urban
planning, improved energy
performance standards for public
building, labeling system, eco
design……
 To support it some measures at the
EU level – A regulation requiring a
reduction in CO3 emissions from
new cars + a revision of the Fuel
Quality Directive + Clean Power for
Transport Package….
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Individual targets of MS
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CCS
„The Commission's proposal for a 2030 climate and energy policy
framework acknowledges the role of CCS in reaching the EU's long-term
emissions reduction goal“…..
…“Significant emissions cuts are needed in the EU's energy and carbonintensive
industries. As theoretical limits of efficiency are being reached and
process-related emissions are unavoidable in some sectors, CCS may be the only
option available to reduce direct emissions from industrial processes on the scale
needed in the longer term“…..
…..“In the power sector, CCS could be a key technology for fossil fuel-based
generation. It could help balance an electricity system with increasing shares of
variable renewable energy“…… (European Commision, 2015).
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CCS
„The Commission's proposal for a 2030 climate and energy policy
framework acknowledges the role of CCS in reaching the EU's long-term
emissions reduction goal“…..
…“Significant emissions cuts are needed in the EU's energy and carbonintensive
industries. As theoretical limits of efficiency are being reached and
process-related emissions are unavoidable in some sectors, CCS may be the only
option available to reduce direct emissions from industrial processes on the scale
needed in the longer term“…..
…..“In the power sector, CCS could be a key technology for fossil fuel-based
generation. It could help balance an electricity system with increasing shares of
variable renewable energy“…… (European Commision, 2015).
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CCS
“No one in the country wants CCS – no party, and certainly not the citizens,”
said Energy transition and Environment minister [for the German
region of Schleswig-holstein] Robert Habeck.
“The underground injection of CO2 would be a clean bill of health for the coal
industry. CCS serves as a justification for the construction of new coal–fired
power plants. But we do not want and need (CCS) for the energy revolution”(
ibid).
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CCS
 Supported from 90s, but the target of up to 12 demonstration
plants by 2015 will be misssed. (First one maybe after 2018).
 The main driver should be the price of carbon – it is not. No
economics behind building CCS facility.
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EU commitments
 Kyoto Protocol – EU15 to reduce its GHG emissions by 8 %
compared to base year (1990, 1995) during the first commitment
period 2008 – 2012. (2012 data shows up to 19,2%).
 Energy and climate package 2009
1) A 20% reduction in EU greenhouse gas emissions from 1990 levels by 2020;
 Roadmap for competitive low carbon economy 2011 – up to 80%
reduction to 2050 compared to 1990
 The EU supports the „Doha Amendment“ that extent KP from
2013-2020 (To be sign by 2015) – 20% target.
 2030 climate and energy framework – 40% by 2030 compared to
1990
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EU commitments
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Summary
 Carbon intensity in the EU has declined by 40,9% since 1990.
 Kyoto target over-achieved.
 Economic growth and emissions have largely been decoupling (In
2012 the EU real GDP was 45% higher than in 1990 while its
GHG emissions decreased by 19,2% in the same time).
 Transport emissions haver risen, the same in case of increase
usage of gas.
 The EU ETS does not act as signal for the decarbonisation of the
power sector or the investment in low-carbon technologies, incl.
CCS.
 = risk of not fulfilling the GHG reduction aims in the non-ETS
sectors for 2030, 2050.
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Summary
 Reduction of GHGs based on raising the share of RES to a great
extent + efficiency.
 EU is a driving force in the UNFCCC negotiations (post-Kyoto
agreement).
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