The EU climate change policy

a. Domestic Action: Setting the Example at Home

Roadmap to 2050

The European Union is making real efforts to reduce its greenhouse gas emissions. Over the past two decades, emissions have gone down by 16%, whereas the economy has grown by 40% over the same period. If current policies are fully implemented, the EU is on track to achieve its targets for 2020 of reducing emissions to 20% below 1990 levels and raising the share of renewables in its energy mix to 20%. We are currently only halfway towards the third goal for 2020 - improving energy efficiency by 20%; much greater efforts will be needed to meet this target.

With its "Roadmap for moving to a competitive low-carbon economy in 2050" the European Union is looking beyond these 2020 objectives and setting out a plan to meet the long-term target of reducing domestic emissions by 80 to 95% by mid-century. It shows how the sectors responsible for Europe's emissions - power generation, industry, transport, buildings and construction and agriculture - can make the transition to a low-carbon economy over the coming decades.

Science tells us that all developed countries would need to reduce emissions by 80-95% in order to have a fair chance of keeping global warming below 2°C. If we do not step up climate action, temperatures might increase by as much as 4°C by 2100.

As a part of the Europe 2020 strategy for smart, sustainable and inclusive growth, the Roadmap for moving to a competitive low-carbon economy in 2050 is contributing to:

  • cutting greenhouse gases by 20% (30% if international agreement is reached)
  • reducing energy consumption by 20% through increased energy efficiency
  • meeting 20% of our energy needs from renewable sources.

 Emission Trading Scheme

The EU Emission Trading Scheme (ETS) is a cornerstone in the fight against climate change. It is the first international trading system for CO2 emissions in the world. It covers over 11.500 energy-intensive installations across the EU, which represent close to half of Europe’s emissions of CO2. These installations include combustion plants, oil refineries, coke ovens, iron and steel plants, and factories making cement, glass, lime, brick, ceramics, pulp and paper.

The ETS gives a financial incentive to reduce emissions by establishing a market-based trading system. Plants that emit less CO2 than their limits can sell their unused emission quotas to other companies that have emissions higher than their allowances. Companies that exceed their emission limits and do not cover them with emission rights bought from others have to pay hefty penalties. The ETS makes sure that emissions are cut where it is cheapest, and lowers the overall costs of reducing emissions.

The aim of the EU ETS is to help EU Member States achieve compliance with their commitments under the Kyoto Protocol. Emissions trading does not imply new environmental targets, but allows for cheaper compliance with existing targets under the Kyoto Protocol. Letting participating companies buy or sell emission allowances means that the targets can be achieved at least cost. If the Emissions Trading Scheme had not been adopted, other – more costly – measures would have had to be implemented.

The ETS now operates in 30 countries (the 27 EU Member States plus Iceland, Liechtenstein and Norway). It covers CO2 emissions from installations such as power stations, combustion plants, oil refineries and iron and steel works, as well as factories making cement, glass, lime, bricks, ceramics, pulp, paper and board.

Nitrous oxide emissions from certain processes are also covered. Between them, the installations currently in the scheme account for almost half of the EU's CO2 emissions and 40% of its total greenhouse gas emissions.

Airlines will join the scheme in 2012. The EU ETS will be further expanded to the petrochemicals, ammonia and aluminium industries and to additional gases in 2013, when the third trading period will start. At the same time a series of important changes to the way the EU ETS works will take effect in order to strengthen the system.

b. Global Action : Leading the International Effort

The European Union has long been a driving force in international negotiations that led to agreement on the two United Nations climate treaties, the UN Framework Convention on Climate Change (UNFCCC) in 1992 and the Kyoto Protocol in 1997. These are important achievements, but recent scientific evidence shows that much more ambitious global action is needed to prevent climate change from reaching dangerous levels.
The Kyoto Protocol requires the 15 countries that were EU members at the time ('EU-15') to reduce their collective emissions in the 2008-2012 period to 8% below 1990 levels. Emissions monitoring and projections show that the EU-15 is well on track to meet this target.

In 2007 EU leaders endorsed an integrated approach to climate and energy policy and committed to transforming Europe into a highly energy-efficient, low carbon economy. They made a unilateral commitment that Europe would cut its emissions by at least 20% of 1990 levels by 2020. This commitment is being implemented through a package of binding legislation.
The EU has also offered to increase its emissions reduction to 30% by 2020, on condition that other major emitting countries in the developed and developing worlds commit to do their fair share under a future global climate agreement. This agreement should take effect at the start of 2013 when the Kyoto Protocol's first commitment period will have expired.

The Cancún Agreement, a balanced and substantive package of decisions adopted at the end of the UN Climate Conference in Mexico (December 2010), represents an important step on the road to building a comprehensive and legally binding framework for climate action for the period after 2012.

c. Climate Change Finance

Europe has pledged financial assistance of €7.2 billion over the period 2010-12 to help developing countries make a fast start on strengthening their capacities to tackle climate change for both adaptation and mitigation including forestry. Fast start finance is a critical vehicle for equipping developing countries to meet immediate adaptation needs, including facing severe weather events and other adverse impacts of climate change.

In 2010, the Commission mobilized €50 million, which has been allocated in a balanced manner between adaptation and mitigation (including REDD+):

  • Adaptation: €25 million under the Adaptation: Global Climate Change Alliance (GCCA) to accelerate action to help least developed countries and Small Island developing States adapt and build resilience to the impacts of climate change.
  • Mitigation: €18 million to accelerate the transition to a low-emission economy and to reduce greenhouse gas emissions. Funding is promoting projects on: capacity building for Monitoring, Reporting and Verification (MRV) and the development of nationally appropriate mitigation actions and low emission development strategies in Latin America, Africa and Asia; renewable energy in Africa; and capacity building to develop sectoral crediting mechanisms in emerging economies.
  • REDD+: €7 million to reduce greenhouse gas emissions by reducing deforestation and forest degradation in developing countries. Funding will partly be allocated to the support the Forest Carbon Partnership Facility; as well as to the creation of the EU REDD Facility, aimed at building developing country capacities for REDD. Most of this funding is being deployed through existing and already operational cooperation instruments and initiatives to ensure timely and efficient delivery.