The EU's 2020 targets for emissions and renewables

The EU has set a target of a 20% cut from 2005 levels in the continent's greenhouse gas emissions by 2020, potentially rising to 30% in the event of a global agreement.

Total EU industrial emissions in 2020 will be capped at 21% below 2005 levels. This means that 20% of all energy consumption - for electricity, heating and cooling, and transport - in the 25 states must be derived from renewable sources by that date.

In addition up to 12 carbon capture and storage (CCS) demonstration projects will be supported and gases capotured would be credited as not emitted under the EU Emissions Trading Scheme (ETS).

The ETS itself will be modified to establish a central cap on emissions rather than the current system of Member States setting emissions caps for their own economies. Furthermore:

• two new gases (nitrous oxide and perfluorocarbons) will be included
• road transport and shipping remain excluded, although the latter is likely to be included later
• agriculture and forestry are also left out because it's hard to measure their emissions
• smaller installations, emitting below 10,000 tonnes of CO2 per year, will be able to opt out from the ETS, provided they institute alternative reduction measures. 

For the UK, the Commission proposes:
• a 16% reduction in UK emissions from sectors not covered by the EU ETS by 2020 from 2005 levels
• 15% of all UK energy to be renewable by 2020
• 10% of road transport fuels to come from renewable sources, as long as they are produced sustainably.

Business Secretary John Hutton said most of the new renewable electricity would come from the fact that "the UK is already scoping a vast expansion of wind energy offshore and tidal power on the Severn". Transport Minister Ruth Kelly welcomed the proposal of sustainability criteria for biofuels.

But Greenpeace said "The EU target for biofuels is a mistake. Biomass is more efficiently used for electricity and heat production rather than to fuel high-consumption cars".

Allocation of credits

Campaigners did welcome the fact that power generators will, from 2013, have to pay for their ETS credits, rather than get windfall profits from being given them as at present, but criticised the loopholes given to high energy users - the steel, aluminium and cement industries - after fierce lobbying.

Currently, 90% of carbon emission allowances are given free to industrial installations, but by 2013 it is estimated that around 60% will be auctioned. The text adds that "full auctioning should be the rule from 2013 onwards for the power sector", which is expected to lead to a 10-15% rise in electricity prices. In other sectors, free allocations will gradually be completely phased out on an annual basis between 2013 and 2020.

However, certain energy-intensive sectors could continue to get all their allowances for free in the long term if the Commission determines that otherwise facilities would relocate to countries with less stringent climate protection laws. The EC says these sectors "are yet to be determined".

Commission President José Manuel Barroso said, "There is no point in Europe being tough if it just means production shifting to countries allowing a free-for-all on emissions. An international agreement is the best way to tackle this." 

Assuming a global climate change deal is reached, member states will continue to be able to meet part of their target by financing emission reduction projects in countries outside the EU, up to a limit of about a quarter of total reduction. CDM administrators have complained this will mean a reduction in projects.

"a very small effort

WWF observed that "The 20% target is not even in line with the latest Bali agreement - that developed countries should cut emissions by 25-40% by 2020". "Overall, it is a very small effort," said Dr Stephan Singer, head of its European Climate and Energy Unit. 
The proposals will get final adoption by April-May 2009 at the latest, following negotiations between member states and the European parliament.