Further negotiations between the Council and European Parliament will be required to reach a first-reading deal on the directives on shared efforts to reduce greenhouse emissions (Hassi report) on geological storage of carbon dioxide (CCS - Chris Davies report) and the greenhouse gas emission allowance trading system (Avril Doyle report).
1. MEPs and Council Presidency reach deal on CO2 emissions from cars (Sacconi report)
Following a series of meetings between MEPs and the French Presidency of the European Council, the two sides have informally agreed details of future targets on CO2 emissions from cars. The compromise reached still needs to be put to a first reading vote at Parliament's December plenary session in Strasbourg and then formally be endorsed by the full Council.
The informal compromise concerns a draft regulation which sets emission performance standards for new passenger cars (the "M1" category) registered in the EU. These account for 12% of overall EU emissions of carbon dioxide (CO2), the main greenhouse gas, according to European Commission's figures. The new regulation is part of the EU's effort to reduce CO2 emissions by 20% by 2020.
The compromise backs the Commission's proposed target of an average of 120g of CO2/km for the whole car industry by 2012, compared to the current levels of 160g/km.The regulation sets an average target of 130g CO2/km for new passenger cars to be reached by improvements in vehicle motor technology. It will be supplemented by additional measures to reach a further 10g/km reduction, to reach the 120g/km target, through other technical improvements such as better tyres or the use of biofuels.
The key elements of the compromise are as follows:
- long term target:
The compromise introduces a long term target for 2020 for the new car fleet of average emissions of 95 g CO2/km.
- phasing in:
the compromise says that manufacturers will be given interim targets of ensuring that average CO2 emissions of 65% of their fleets in January 2012, 75% in January 2013, 80 % in January 2014 and 100% from 2015, comply with the car manufacturer's specific CO2 emissions target.
- excess emissions premiums:
The compromise provides that manufacturers will have to pay the following fines (so called excess emissions premiums) if their average emissions of CO2 exceed their specific emission target set by the regulation:
from 2012 until 2018:
5 Euro for the first gram of CO2
15 Euro for the second gram of CO2
25 Euro for the third gram of CO2
95 Euro from the fourth gram of CO2 onwards.
From 2019 manufacturers will have to pay 95 euro for each gram exceeding the target.
Following a demand by the Environment Committee, the compromise states that car manufacturers can apply to be given special credits for eco-innovations - that is innovative CO2 reducing technologies on the car, such as energy efficient lights, which are currently not included in the normal test cycle. The total contribution of those technologies can be up to a 7- gram CO2 reduction of each manufacturer's average specific target.
Special targets for small manufacturers:
The compromise allows- as proposed by the Commission- small manufacturers which produce less than 10,000 new registered cars to apply to the commission for a derogation from the specific emissions target.
As demanded by the Environment committee, also larger independent car manufacturers - producing 10,000 to 300,000 new registered cars per year - will have the chance to apply for an alternative target of reducing their average specific emissions by 25 per cent compared to 2007 levels. Such application may be made by the manufacturer or together with any of its connected undertakings.
In its vote, the Environment committee had proposed to introduce a multiplier for ultra low carbon vehicles, to give incentives to car manufacturers. The compromise states that each new passenger car with CO2 emissions of less than 50 g CO2/km shall count as: 3,5 cars in 2012 and 2013, 2,5 cars in 2014 and 1,5 cars in 2015. By this calculation the average CO2 emissions from manufacturers will be reduced. From 2016 it shall count as any other car.
2. MEPs and Council Presidency reach deal on renewables directive (Turmes report)
After several rounds of informal negotiations, EP negotiators have reached an agreement with the Council's Presidency on a proposed directive on renewable energies including biofuel targets. The compromise still needs to be formally endorsed by the full Council and put to a first-reading vote at Parliament's December plenary session in Strasbourg.
MEPs and the Council's Presidency reached an informal compromise on a proposed directive which establishes mandatory national targets to be achieved by the Member States, so as to ensure that the EU will reach its climate target of at least 20% renewable energy in the total energy consumption by 2020.
Satisfied with the agreement, Parliament's rapporteur, Claude TURMES (Greens/EFA, LU) said: "This is a good day for climate and energy security in Europe. With this major legislation renewable energy will be put at the very heart of EU energy policies and at the same time reinvigorate the European economy and jobs through green technology investments".
2014 review will not change the 20% target
On Tuesday morning MEPs and the Council Presidency solved the last outstanding issue: they agreed that the Commission's evaluation of the implementation of the directive, which is to take place by 2014, will not affect the overall 20% target but will serve to improve, if necessary, the efficiency of cooperation mechanisms.
Achieving national targets jointly through cooperation mechanisms
The political agreement fully incorporated the Industry Committee's proposals for cooperation mechanisms to allow Member States to:
run joint projects with one or more Member States on green electricity production, heating or cooling;
transfer renewable energy "statistically" between each other;
join or partly coordinate their national support schemes.
The compromise also adds the possibility to count green electricity consumed in a Member State but produced by newly constructed joint projects with third countries.
10% target for the transport sector
The informal compromise backs the target of at least 10% renewable energies in the transport sector by 2020:
"second-generation" biofuels produced from waste, residues, or non-food cellulosic and ligno-cellulosic biomass will be double credited towards the 10% target;
renewable electricity for trains will be counted only once;
renewable electricity consumed by electric cars will be considered 2.5 times its input;
to be counted biofuels must save at least 35% of greenhouse gas emissions compared to fossil fuels; from 2017 greenhouse gas emission savings of existing installations must be at least 50%, those of new installations at least 60%;
the Commission will develop a methodology to measure the greenhouse gas emissions caused by indirect land use changes - that is when crops for biofuels production are grown in areas which have previously been used to grow a food crop and this food crop production then moves to other areas which were not in use before (e.g. existing forests)
National overall targets for the share of energy from renewable sources in final consumption of energy in 2020.
UK and Ireland
Share of energy from renewable sources in final consumption of energy, 2005 (S2005) =1.3% UK 3.1% -Ireland
Target for share of energy from renewable sources in final consumption of energy, 2020 (S2020) =15% UK 16% Ireland
3. EU Emission Trading System (ETS -Doyle report)
Parliament and the Council have yet to agree from when all new CO2 emission permits are be auctioned under the next edition of the EU Emission Trading System (EU ETS), or upon which industries will get how many allowances for free and for how long (although deals have been struck on other issues). Parliament, Council and Commission representatives are to meet this Saturday to seek an agreement on the outstanding points. Any compromise needs to be put to a first-reading vote at Parliament's December plenary session in Strasbourg and then has to be approved by the Council.
The EU ETS is a "cap and trade" system: it caps the overall level of emissions allowed but, within that limit, allows participants to buy and sell allowances as they require, so as to cut emissions cost-effectively. Launched in January 2005, it is a key tool for achieving the EU's aim of reducing its greenhouse gas emissions by at least 20 % by 2020 from 1990 levels, or by 30% in event of an international agreement. The ETS currently covers over 10,000 installations in the energy and industrial sectors, which are collectively responsible for close to half of the EU's emissions of CO2 and 40% of its total greenhouse gas (GHG) emissions.
The current ETS covers for example power stations, oil refineries and factories making cement, glass, lime, bricks, ceramics, and pulp. The Commission proposes to extend its scope to include new industries (e.g. aluminium and ammonia producers and petrochemicals) and two further gases (nitrous oxide and perfluorocarbons). With its proposal the Commission plans to reduce GHG emissions from most industrial sectors covered by the ETS by 21% from 2005 levels by 2020.
In the first and second trading periods (2005 -2012) the great majority of allowances were allocated free of charge to installations. The Commission now proposes that, from 2013, full auctioning of emission allowances should be the rule. A phasing in of auctioning is proposed for manufacturing industries. According to the Commission proposal, industries will receive a certain quota of emission allowances free of charge but will have to purchase any further emission allowances.
No agreement has been reached yet on how and when auctioning shall be introduced or which industries will get how many allowances for free for how long, since no final Council position has been established. Other outstanding issues include the use of the auction revenues, the funding of carbon capture and storage (CCS). These issues are to be debated at the forthcoming European Council with a view to adopting a Council position. Thereafter, another meeting between the French Presidency of the Council and MEPs will be scheduled to discuss outstanding issues and seek an agreement between the parliaments delegation led by Avril Doyle (EPP-ED, IR) and the Council. If an agreement can be reached on all outstanding points, Parliament plans to vote on the agreement at its first reading, on 17 December.
Environment Committee backs Commission proposal for full auctioning of permits, with an exception for energy-intensive industries
In its 17 October vote on the report by Avril DOYLE (EPP-ED, IE), the Environment Committee backed Commission plans to phase out free emission permits, leading to full auctioning, with an exception for energy-intensive sectors. The Committee said that 85% of all emission allowances for the manufacturing sector should be allocated free of charge in 2013 (not 80%, as proposed by the Commission), a share that is to be reduced to 0 % in 2020.
The committee also backed the Commission's proposed exception for sectors at serious risk of "carbon leakage" - that is the relocation of production to third countries with a less strict climate policy, leading to increased CO2 emissions by these countries. MEPs agreed that these sectors might receive up to 100% of free allowances until 2020. MEPs did not list the sectors "exposed to carbon leakage" but asked the Commission to identify them three months earlier than the Commission's proposed date of 31 March 2010, and then to revise them every four years, rather than every three. They also set out detailed criteria for identifying sectors exposed to carbon leakage.
Use auction revenues to adapt to climate change in the EU and reduce emissions in developing countries
The Environment Committee wants to channel the ETS auction revenues - which, according to Commission estimates could amount to around €50 billion annually by 2020 - to pay for climate change protection measures. They say that at least 50% of these revenues should be paid into a dedicated international fund, which invests in projects in developing countries to help, for example, to reduce greenhouse gas emissions or to reverse deforestation. The remaining auction revenues should also be used to fund climate change projects inside the EU, say MEPs, thus helping Member States to adapt to climate change or to fund research and development.
Carbon capture and storage: demonstration projects to be financed through allowances
The Environment Committee wants to use the ETS to support large-scale commercial demonstration projects undertaken in the capture and geological storage of carbon dioxide (CCS). MEPs therefore introduced the possibility of awarding up to 500 million allowances to such projects in the EU or in third countries. It also asks the Commission to strive to ensure that contracts for the construction of 12 large-scale demonstration facilities are let before the UN meeting in Copenhagen in November 2009 (as promised by the EU Council in March 2007).
MEPs want aviation to be treated like other sectors
Until now, Council has not wished to reopen the question of how to deal with the aviation sector in the ETS directive. The Environment Committee has asked for the aviation sector to be treated like other manufacturing sectors, meaning that from 2013, the sector shall receive 85% of the allowances for free, and this quota would decrease by equal amounts each year, resulting in no free allocation in 2020. Council on the other hand wants to leave the situation as it is, meaning that the aviation sector would receive 85 % of the allowances for free, for the whole period.
Points agreed with the Council (subject to overall agreement and approval by the Parliament in plenary session and Council)
Include shipping in emissions trading if no international IMO agreement
MEPs and Council representatives have agreed that if an International Maritime Organisation agreement to include international maritime emissions in IMO reduction targets has not been approved by 31.12.2011, the Commission should propose that these emissions be included in the Community reduction commitment, to take effect by 2013.
Exclusion of small installations supported but widened
The compromise supports the Commission's proposal that Member States be allowed to exclude small installations from the scope of the system, provided they are subject to equivalent emission reduction measures. However, it raises the proposed thresholds, as proposed by the Environment Committee: Member States should be able to exclude installations with a rated thermal input below 35 MW (as opposed to 25 MW) and reported emissions of less than 25,000 tonnes of CO2 equivalent (as opposed to 10,000 tonnes) in each of the three years + preceding the entry into force of the revised ETS.
4. Equipping power plants to store CO2 underground (CCS - Davies report)
Informal negotiations between a Parliament delegation led by rapporteur Chris Davies (ALDE, UK) and the Council's Presidency have not yet brought about an agreement on a draft directive providing the legal framework for the new carbon dioxide capture and storage technology (CCS).
Emissions from power plants - especially from those fired by oil, coal and natural gas - account for around 40 percent of all CO2 emissions in the EU, estimates the European Commission. To cut their CO2 emissions, industrial installations and power plants could in future use new technology to capture CO2 and store it "permanently and safely underground" in geological formations.
"Schwarzenegger clause": future power plants with capture technology
One of the issues in dispute concerns a new provision, which the rapporteur had termed the "Schwarzenegger clause". Parliament's Environment Committee had introduced this new provision into the draft directive setting an "emission performance standard" for new power plants with a capacity of more than 300 MegaWatts. The committee wants those large power plants to emit from 2015 onwards a maximum of 500 gram CO2 per kilowatt hour on an annual average basis. Thus, future power stations would be required to store carbon dioxide underground instead of emitting it to air. (Davies report amendment 126: art 32)
Secure financing of 12 demonstration projects by emission trading allowances
The European Council in March 2007 spoke out for constructing at least 12 large-scale commercial demonstration facilities by 2015 to test the permanent underground storage of CO2. As the financing of these projects is not yet secured, Environment Committee MEPs proposed in their vote on the revised EU Emission Trading System to award up to 500 million ETS allowances in the new entrance reserve to large-scale CCS projects in the EU or in third countries. (Doyle report amendment 56: art 1 point 8) The value of this support mechanism will depend on the price of CO2 when the gas is eventually buried underground, but according to the rapporteur it could easily exceed €10 billion.
However, no agreement with Council has been reached on this issue so far. The Council proposed to reserve only 100 to 200 million allowances for CCS projects - an offer which would provide for only up to 6 demonstration projects.
Furthermore, the Environment Committee wants the Commission to ensure that contracts for the construction of the 12 large-scale demonstration facilities are let before the United Nations Climate Change Conference in Copenhagen in November 2009.
5. Satu HASSI (Greens/EFA, FI) on efforts of Member States to reduce greenhouse gas emissions: Member States should face strict fines and sanctions if they fail to meet national reduction targets for greenhouse gas emissions from sources that are not covered by the EU Emissions Trading System says the Environment Committee. MEPs backed national targets proposed by the Commission for 2013-2020. In addition, they set new EU long-term (post-2020) reduction targets of at least 50% by 2035 and of 60% to 80% percent by 2050 compared to 1990 levels.
Member States whose greenhouse gas emissions are below its limit should be able to transfer, sell or lend part of its entitlement to another Member State, to help it meet its target. The transfer revenues should then be invested in energy efficiency, renewable energy or climate-friendly modes of transport, says the amended text. MEPs want the EU to provide grant-based financial assistance for developing countries to help them adapt to climate change. This assistance should increase from €5 billion in 2013 to at least €10 billion in 2020.
Member State greenhouse gas emission UK and Ireland
Member State greenhouse gas emission limits by 2020 compared to 2005 greenhouse gas emission levels for sources not covered under Directive 2003/87/EC - UK -16%, Ireland - 20%.
Member State greenhouse gas emissions in 2020 resulting from the implementation of Article 3(in tonnes of CO2 equivalent) UK 310387829, Ireland 37916451.
6. Cutting greenhouse gas emissions from transport fuels by 10% (Corbey report)
The revised fuel quality directive sets technical specifications on health and environmental grounds, as well as a target for reducing greenhouse gas emissions produced throughout the life cycle of transport fuels - that is of fossil fuels like petrol, diesel and gas-oil as well as of biofuels, blends, electricity and hydrogen.
Up to 10% reduction by 2020
In informal talks Parliament negotiators and the Council Presidency agreed that suppliers should by 2020 reduce "as gradually as possible" the greenhouse gas emissions caused by the extraction or cultivation, including land-use changes, transport and distribution, processing and combustion of fuels by up to 10%:
A binding 6% reduction compared to 2010 levels is to be reached by the end of 2020: Member States can set interim targets of 2% by the end of 2014 and a further 4% by the end of 2017.
An indicative additional 2% shall be obtained through the use of electric vehicles - such as cars, excavators, bulldozers or inland water vessels but not trains - or greenhouse gas saving technologies such as carbon capture and storage in the production process.
Credits purchased under the United Nations' Clean Development Mechanism shall achieve a further indicative 2% cut.
In its vote on the proposal on 27 November 2007, Parliament's Environment Committee had backed the Commission's binding obligation for fuel suppliers to cut emissions by 10 % by 2020. The compromise reached with Council, however, sets a binding 6% reduction and asks the Commission to submit a review by 2012 before the directive might be amended to make the indicative 4% reduction mandatory, too.
The cuts in greenhouse gas emissions could, for example, be achieved by using more biofuels, alternative fuels or by reducing "gas flaring and venting" at production sites, says the revised text. The World Bank estimates that gas flaring and venting - the burning off or releasing of natural gas wastes in oil wells and refineries - causes about 400 million tons of carbon dioxide in annual emissions.
To ensure that the CO2 reduction obligation does not lead to unsustainable production of biofuels, the production sustainability criteria of the revised renewables directive will be inserted into the fuel quality directive as well.
Introduce low-sulphur fuels to improve air quality
The updated fuel quality directive will limit the sulphur content of diesel to a maximum of 10 mg/kg. Furthermore, from 2011 gas oil (for example, used by inland water vessels, excavators, bulldozers, agricultural and forestry tractors) may contain no more than 20 mg/kg of sulphur.
Prevent health risks due to metallic additives
The amended directive will also require the Commission to assess the health and environmental risks from the use of metallic additives in fuel and to develop a test methodology. As long as such a test methodology is not yet established, fuels may not contain more than 6 mg of the metallic additive methylcyclopentadienyl manganese tricarbonyl (MMT) per litre from 1 January 2011. The limit will be lowered to 2 mg from 1 January 2014.