A group of business advisers have joined with high profile
corporate brands this week in demanding a more comprehensive and
sustainable EU energy strategy.The First Advisory Council to the Green Growth Platform of European
Ministers published a report in advance of the next week's European
Council discussions on the bloc's energy security, which have leapt up
the political agenda in response to mounting geopolitical tensions in
Ukraine and the Middle East.
The report is the first major contribution from the Green Growth Group, which was launched last autumn
with a view to uniting those European governments and business groups
that want to see more ambitious action to curb emissions. As such it
brings together 14 European governments, including the UK, Germany,
France and Italy, as well as a host of blue chip businesses under the
auspices of the EU Corporate Leaders Group on Climate Change.
The new report, which significantly is also backed by the IEA and
OECD, makes a collection of wide-ranging recommendations designed to
help reduce carbon emissions and increase energy security across the EU,
while boosting the bloc's economy. The EU's energy system needs to spend money on energy to become more
prosperous, the document said. "The EU's negative trade balance is
largely due to its very high imports of fossil fuels rather than a lack
of industrial competitiveness in its manufacturing sectors," it argued,
adding that it needed €2tr in additional investment capital to curb its
reliance on the 53 per cent of energy it currently imports.
This investment would help to overhaul EU energy infrastructure, it
said, calling for legislation to support more interconnections between
states that would make it easier for the bloc to increase its share of
renewable energy. At a more local level, the report said retrofits for energy efficiency could cut energy bills by around 36 per cent.The report also argued that new low carbon energy infrastructure
should be complemented by economic reforms, such as the creation of a
single energy market to assist with a low energy transition.
In addition, the group called for the adoption of a binding renewable
energy target of 27 per cent for 2030 and argued the region should
concentrate investments in renewable energy, while also continuing to
support the development of carbon capture and storage technology.
However, the support for binding renewable energy target will put the
group on collision course with some EU member states, including the UK,
that have voiced opposition to the adoption of technology specific
energy targets. However, it is likely to secure wider support for its calls for the
European Emission Trading Scheme (ETS) to be reformed, with a
concentration on mechanisms that will result in higher carbon prices. In
particular, the report backs plans for a Market Stability Reserve
(MSR), which would allow governments to store allowances in a way that
would help them sustain prices in the face of a current surplus. The
group set a 2016 deadline for for the MSR to be introduced.
Measures such as these will contribute to a 40 per cent domestic
emissions reduction target for 2030, the group said, adding the
overarching emissions target to its list of recommendations. The report also calls for greater inclusion of South Eastern Europe
in energy efficiency plans, pointing to strong potential for energy
savings. And it stressed that the adoption of its recommendations would
deliver a major boost to the EU's energy security, which has been
highlighted by Russia and Ukraine's role in providing gas to the EU
region. A more comprehensive and detailed energy roadmap for Europe would
enable the region to plan for energy security crises such as the current
tension, the group said, adding that expanding the southern gas
corridor from non-Russian markets such as Africa would also help to
mitigate such problems.
The report won immediate support from the Energy Ministers of both
the UK and Germany, as the EU's leading economies prepare to push for
the adoption of a more ambitious energy and climate strategy. "The IEA, OECD and European business leaders behind today's report
are absolutely right," said UK Energy and Climate Change Secretary, Ed
Davey, in a statement. "Strengthening Europe's energy security and
combating climate change are two sides of the same coin. What is good
for one is generally good for the other. That's why the UK and many
other like-minded countries are pushing for a far-reaching EU energy
security package to be embedded within an ambitious 2030 energy and
climate package with a target of at least 40 per cent domestic emission
reductions."
His comments were echoed by German Environment Minister Barbara
Hendricks, who predicted that it would help inform upcoming EU
negotiations. "Making our economies more energy-efficient and developing
indigenous renewable energies is our best insurance against import
dependency and high energy bills," she said. "We therefore need to agree
on three ambitious and binding targets for GHG, Renewables and
Efficiency in 2030 this October. GHG emissions must be reduced by at
least 40 per cent internally with an option to increasing ambition
during the international negotiations, also via high quality
international certificates. We also need to swiftly reform the emissions
trading scheme by launching the market stability reserve already in
2017 and directly transferring backloaded certificates into the
reserve."
The report underlines the growing business support for the adoption of an ambitious EU energy and climate package, and follows a letter sent to ministers
last week by a collection of companies that warned energy insecurity
posed a threat to corporate growth. That letter contained many of the
same sentiments, and the advisory council has some of the same members. A second advisory council is also currently working on a report
detailing some of the challenges facing Europe as it transitions towards
a low carbon energy strategy.
It is clearer than ever that many of the EU's most influential
governments, businesses, and think tanks want to see the bloc commit to a
new wave of ambitious decarbonisation goals. The question now is
whether the Ministers of the Green Growth Group can convince their
colleagues to join them.
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