EU Energy, Carbon Plan Set for Talks With Leaders’ Envoys

European Union negotiations this week on planned energy and climate policies will focus on ways to share the burden of carbon reductions after 2020, according to an EU document prepared for the talks.

In the series of bilateral discussions, the bloc’s senior officials and representatives of EU heads of state and government will also discuss ways to boost the share of renewable energy and the need for an energy-efficiency target, according to the document, which was obtained by Bloomberg News.

A deal on the principles of the 2030 energy and climate framework should improve coherence between EU policies and ensure greenhouse-gas cuts in “a cost-effective manner,” with a reformed EU emissions-trading system playing a central role, according to the document. The prospective agreement, which EU leaders in the European Council plan to reach at their summit in October, should also “ensure security of supply at affordable and competitive prices,” according to the document.

The EU debate comes as the 28-nation bloc seeks to diversify its supply sources and cut dependence on imports of Russian natural gas. Energy security is set to move up the European agenda after talks to solve a pricing dispute failed last night between Russia, the region’s biggest supplier, and Ukraine, the transit country for around half of the gas to the EU. Ukraine said Russia cut gas supplies today, a move that risks disrupting deliveries to Europe.

Ukrainian Crisis

EU governments are divided on the impact of the Ukrainian crisis, with Germany calling for ambitious carbon-reduction and renewables goals to cut the reliance on imported fossil fuels and Poland urging caution and guarantees that nations retain their sovereign right to decide about energy mix and will be allowed to use domestic resources, such as coal and shale gas.

The European Commission, the bloc’s regulatory arm, in January proposed that leaders back stepping up emission reductions to 40 percent by 2030 compared with the 2020 goal of cutting greenhouse gases by 20 percent from 1990 levels. Such a target would be the most cost-efficient pathway to meet Europe’s long-term political goal of cutting pollution by at least 80 percent by 2050. Agreements by EU leaders require unanimity.

``Bilateral consultations are scheduled to take place and are very important to reach progress on the 2030 framework in time for a deal in October,'' said Isaac Valero-Ladron, climate spokesman for the European Commission. He declined to comment on the content of the document for the meetings, which will be held behind closed doors.

More Clarity

To meet the 40 percent headline objective, industries covered by the cap-and-trade ETS program, such as producers of power, steel or chemicals, would need to lower emissions by 43 percent by 2030. That compares with the current goal of 21 percent by 2020 from 2005 levels. In sectors outside the carbon market, carbon discharges would be cut by 30 percent.

The consultations this week should provide more clarity on whether the current rules on distribution of emission permits in the ETS should continue, according to the EU document. Under existing laws, all allowances that are not handed out to companies for free should be auctioned and are divided among member states.

The bloc agreed in 2005 that 88 percent of those permits should be distributed on the basis of verified emissions, 10 percent would depend on solidarity and growth rules and the remaining 2 percent would be divided among countries that in 2005 cut emissions by at least 20 percent under the Kyoto Protocol.

The EU leaders’ envoys, known as sherpas, will also present their opinions on how to encourage modernization in sectors covered by the ETS, which currently allows temporary allocation of free permits for utilities in central and eastern European countries by 2020, the consultation document showed.

National Targets

“Sherpas will be invited to express their views on whether such an option should exist beyond 2020 or whether other mechanisms should be elaborated to foster modernization of the energy sector and tackle the investment challenges in certain sectors and member states,” according to the EU note.

Talks will also focus on whether the bloc should prolong with some updates the rules for sharing the emission-reduction effort in sectors not covered by the cap-and-trade program, the document showed. The 2009 EU law sets national targets, taking into account gross domestic product per capita in member states and attributing a higher proportion of the burden to more affluent countries.

Another point on the agenda of the bilateral meetings are measures to prevent companies from relocating production to regions without emission curbs, a phenomenon known as carbon leakage. Envoys will also comment on the commission’s proposal to boost the share of renewable energy to 27 percent and increase energy efficiency without separate targets binding on member states, according to the consultation note. The bloc currently has a binding 20 percent renewable-energy goal and a non-binding 20 percent energy-efficiency objective.

“The commission considers that a greenhouse-gas emissions reduction target of 40 percent would require a level of energy savings of 25 percent in 2030,” the document showed. “Sherpas will be invited to provide views whether the October European Council could set an energy-efficiency target for 2030, and if so, whether this should be in line with the current setup.”

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