The 2030 Framework for Climate and EnergySustainable Development or Expensive Dreams?

PRESENTATION byMichael STEURER

Warsaw, 15 October 2014

EUROCHAMBRES’ NETWORKEUROCHAMBRES’ NETWORK

EU: frontrunner on climate action

Kyoto 1997 Paris 2015

Source: World Energy Outlook Special Report (2013)

Kyoto II

Towards the 2030 framework

Development of Industrial Production

Euro area (total industry, excluding construction)

Source: European Central Bank (Eurostat data)

Energy intensive goods

Share of global export markets for energy-intensive industries

Source: OECD/IEA 2013

Development of Energy Prices

Electricity price for industrial consumers (€/kWh)

EU data: average retail price of industrial consumers (includes all sectors); Source: EUROSTATUS data: average retail price of electricity price to industrial consumers; Source: EIA

Development of Energy Prices

Natural gas price for industrial consumers (€/Gigajoule)

EU data: average retail price of industrial consumers (includes all sectors); Source: EUROSTATUS data: average retail price of industrial consumers; Source: EIA

EU ETS: Open questions

• Carbon prices will rise in the future:

€ 6 € 30-40?

• Post 2020 protection measures for energy-intensive industries are uncertain (free allocation?)

• Pending ETS reform (Market Stability Reserve and revised linear reduction factor) reduces predictability of future development

Practical example

Business emitting 11 million tons of CO2/year

Current situation: CO2 price of € 5 + purchase of 1 m. certificates

► costs of € 5,000,000

Projections for 2030: CO2 price of € 35 + purchase of 4 m. certificates

► costs of € 140,000,000

Costs are multiplied by a factor of 28!

Conclusions

• Targets need to be realistic and achievable

• Current plans of the Commission undermine the growth potential of the EU and could lead to carbon leakage

• Only if Europe’s economic power can be preserved, our low-carbon strategy will also be attractive for other economies

• The EU should remain a low-carbon technology leader. This is only possible if the attractiveness of the EU as industrial local can be maintained.

Recommendations for action

1. Set a realistic and conditional greenhouse gas reduction target, with the level dependent on the conclusion of a legally-binding international climate change agreement in December 2015.

2. Avoid measures that undermine the market-based characteristics of the EU Emissions Trading Scheme (ETS).

3. Put in place more cost-effective support schemes for renewable energies which should be temporary and degressive, rather than guaranteed over a long period of time.

Recommendations for action

4. Swiftly complete the internal energy market and provide adequate infrastructure to strengthen security of energy supply in the EU and to cope with the increased uptake of renewables.

5. Pursue energy efficiency by ensuring the right framework conditions and facilitating effective measures to promote the use of energy management tools and practices, while refraining from a separate energy efficiency target for 2030.

6. Invite the new Commission to urgently bring forth concrete proposals for boosting the re-industrialisation of Europe and stimulating investments in the EU.

CONTACT DETAILSCONTACT DETAILS

Michael STEURERAdvisor, EU Affairs

Energy, Climate Change, Environment

Avenue des Arts 19 A-DB - 1000 Brussels

Tel: +32 (0)2 282 08 77Fax: +32 (0)2 230 00 38

steurer@eurochambres.euwww.eurochambres.eu

Thank you for your attention !