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Andris Piebalgs, Speech at the Euro case annual conference "How can Europe meet its 2020 renewables target?" 03 November 2008
London (EU) - Good morning and thank you for this chance to set the scene for today's conference and recommend to you the "climate-energy" package proposed by the Commission earlier this year. It is a package that I believe is bold and ambitious, reasonable and balanced – and today I will expand on why this is the case.
Where will the RES come from?
In January 2008 the Commission proposed a package of Directives that would implement its "20-20-20" targets: 20% renewable energy, 20% greenhouse gas emissions reductions, and 20% improvement in energy efficiency – all to be achieved in 2020. The Commission's analysis showed that these 20% targets are feasible on all fronts. But I'm going to focus on the renewable energy target. I must also add that, as part of the 20% renewable energy target, there is a 10% target for renewable energy in transport: this had already been agreed by the EU's Heads of Government. Clearly, the expansion of renewable energy will have to accelerate significantly across Europe, and not least in the UK. But it can be done.
Our analysis suggests how Europe might get there. We estimate that as much as 34% of electricity will be produced from renewable energy sources, of which 12% will probably come from wind. We will see strong growth from Combined Heat and Power installations using biomass. Solar, as we will hear later, will play its role – and we expect the costs of solar energy to decline by 50% by 2020[1]. Renewables in the heating sector could double to around 18%, using more biomass, efficient CHP and household heating. Renewables in the transport sector could also expand quite significantly by 2020, using both biofuels and electricity in vehicles. The technology-specific sessions later today will explore the prospects of these individual technologies and how they will contribute economically, as well as environmentally, towards reaching the renewables target.
Country examples
My job is not to tell the UK how to meet its target. But I would like to use the opportunity today to tell you some of the good things we see in other Member States.
Spain
We hear about the variability of wind energy. Well, wind electricity in Spain provides about 10% of electricity on an average day, and on 18 April this year (a Friday – not a weekend) the contribution of wind reached 32% of Spain's power needs. Spain has managed to integrate wind energy into its network through a better grid management strategy (including forecasting) and investment in equipment. Spain is also pioneering the use of solar thermal power generation at the Abengoa plant near Seville.
France
France has a tidal energy project at Rance that has been supplying renewable electricity into the French national grid since 1967. Although modest in size, at 500 GWh a year – it does have the virtue of actually existing. Furthermore, it produces electricity at a cost of approximately 12 Euro-cents per KWh. I should mention here, that I recently visited the Severn Estuary to learn for myself what options were being examined for harnessing tidal power here in the UK.
Portugal
Portugal too wants to invest more in marine energy, and has announced plans for 1 GW of capacity to be put in place within the next decade. Last September, Portugal inaugurated the world's first "wave farm", consisting of three wave energy converters, developed by the Scottish company Pelamis Wave Power. This "wave farm" has an installed capacity of 2.25MW, enough to meet the average electricity demand of more than 1,500 Portuguese homes. A second phase of the project is now planned to increase the installed capacity from 2.25MW to 21MW using a further 25 Pelamis machines.
Denmark
Let us not forget that one of the ways of helping to meet the renewable energy targets is to reduce total energy use – in which case, the same amount of renewable energy production makes a higher proportion of the total. For example, about 75% of Denmark’s district heating is produced in combined heat and power plants that generate both heat and electricity simultaneously, and 40% of this is without any CO2 emissions at all thanks mainly to the use of biomass. Basically, this CHP technology raises a 40% rate of efficiency to 90%, and so less fossil fuel is used and less CO2 produced. This illustrates nicely how the different targets (RES, GHG and energy-efficiency) are all linked.
Latvia
Finally, a word about "the country I know best". I give this example because sometimes options are sitting there waiting to be discovered. Latvia has enormous under-exploited biomass potential. About 55% of the surface area of the country is covered by forests. A recent study presented to me suggests that between 33% and 60% of Latvia's total energy consumption could potentially be met by indigenous biomass. Coupled with hydro-power, this suggests that Latvia could potentially be almost carbon-free for its power and heating needs.
The Directive
Following extensive discussions with stakeholders, we came forward with the legislative package in January 2008. Here, we strived to address all the problems that the renewable energy sector faces today:
First, there needs to be a stable policy regime: legally binding targets for each Member State would be fixed – differentiated according to their specific circumstances. These targets would set the goals. We also require Member States to prepare "National Action Plans" which spell out how they will reach the targets: we don't prescribe sectoral shares for electricity, or heating and cooling, but Member States will have to assess and determine for themselves where the growth will come from. They will also have to explain what the shares will be and what instruments will be used to ensure the targets are reached. In the meantime, the Directive sets an "indicative" trajectory that Member States will be expected to meet in order to show that they are "on track".
Second, there is need for flexibility in order to reach the targets in a cost-effective way. So, in addition to the flexibility of setting their own sectoral targets, Member States are free to decide on the instruments and measures to be used: it could be the on-going use of obligations on suppliers (such as with biofuels today), renewable energy obligations, or so-called "ROCs" in the UK context – in the electricity sector – perhaps together with feed in tariffs for novel or small scale technologies. It could include more support for household biomass heating or solar hot water systems... these are ideas that are being aired in the UK. Flexibility is also allowed between Member States. Member States may choose to undertake collaborative bilateral or multilateral projects, or transfer an over-achievement by one Member State to compensate for an under-achievement by another. All these options for flexibility lead to greater cost-effectiveness in meeting the targets.
We also modify the existing regime for electricity to ensure that electricity imported from third countries can count towards Member States' renewable energy targets: so Member States can invest in cheaper renewable energy sources within the EU and in neighbouring countries... helping to build biomass power plants in Albania or the Ukraine, for example, or solar plants in north Africa... These can be much more profitable investments, and so both parties benefit: we get cheaper renewable energy to count towards the target; they get new sustainable energy infrastructure.
Third, improvements need to be made to the administrative and planning regimes. As Commissioner I have found that there is not one Member State of the 27 where people are satisfied with the planning regime for renewable energy. There is not one Member State out of 27 where the administrative arrangements and procedures could not be simpler and clearer. The Directive aims to tackle this, and in so doing, have a direct impact on reducing the costs industry faces in developing renewables.
Fourth, we need to focus more attention on electricity grid access for renewable electricity: we already have a legal framework for this, but it doesn't appear to be strong enough, or its implementation adequate enough. Green electricity is going to have to grow substantially in order for us to reach our targets, and any aversion to decentralised or distributed generation, or concerns about intermittency, have to be overcome – as they HAVE been overcome in some countries (I already mentioned Spain).
Finally, given the wide debate on biofuels, our Proposal establishes tough but effective criteria to ensure that the biofuels used in Europe generate real greenhouse gas and other benefits – and indeed, lead the world in establishing strict criteria for biofuels sustainability.
So this is our Proposal. There are a range of obstacles facing the development of renewable energy in all Member States, and we have tried to address each of them. Since we published the proposed law in January, it has been working its way through the European legislative process. Discussions are now intensifying between the EU's 27 Energy Ministers in Council and Members of the European Parliament. Throughout all of this, I have continued to meet with Ministers myself – including UK Ministers John Hutton and Ed Miliband – to hear their concerns and to try and help address them.
We very much hope that the Council and European Parliament will agree this new framework by the end of this year.
As already mentioned, the renewables Directive is just part of package. Our efforts to improve the Emissions Trading System and to cut greenhouse gas emissions by 20% will clearly work in tandem.
Improving energy efficiency is still the most cost-effective means of reducing emissions – we already do a lot in this area – emissions standards for cars (currently being strengthened), labelling regimes, eco-design minimum efficiency standards, and energy efficiency codes for buildings. Action is being taken on all these fronts and will be strengthened in the coming year. In a matter of days, the Commission will publish its second Strategic Energy Review together with our plans for revising and improving key elements of our energy efficiency legislative framework.
So the Commission believes it has put forward a coherent package that will help all of us in Europe meet our energy and climate change goals – and importantly, help persuade other regions of the world to act.
Costs
Let me now touch on the economic aspects of the energy and climate package and of the renewables Proposal in particular. To begin with, I should note that our analysis of the package suggests that the short term net financial and economic costs of the package will be very modest. There is clearly a direct cost of the policy, but it is relatively minor, and we believe that there is a clear medium-term gain.
For the UK, we estimate the costs as being up to about 0.41% of GDP, or a little under £1 billion a year by 2020. This compares favourably with the billions of pounds used in the UK's banking rescue package. Even compared with the normal "business as usual" energy investments that are needed to replace aging power plants and infrastructure, the quantities are relatively small and the overall gains clearly significant and worthwhile.
Economic crisis
All of which brings me to my final point: there are those who are saying that we can no longer afford such a package.
In response, I would say that there are a range of safeguards already in the package to address the issues: energy intensive industries and internationally exposed sectors can be protected - we have a framework for that. The auction revenues raised by auctioning in the Emissions Trading Scheme will provide a huge source of revenues that governments can use to soften the economic burdens. I would even say that EU companies face less uncertainty in terms of carbon constraint that many of their competitors in the US, in Japan, or in other industrialised countries. But more importantly, it is time to realise that we don't have a long-term choice about developing a low carbon economy. Climate change, vulnerability to high fossil fuel prices and energy security mean that we must not let current market turmoil distract us.
Conclusion
So my message today is that we have a very clear vision of how the renewable energy targets will be met – and I welcome the UK Government's fleshing out of its own ideas in the Consultation document launched by the Prime Minister last June.
The sessions later this morning will explore the technologies that will help us meet our objectives and the ways in which the growth of renewable energy can be encouraged. These are important issues and I wish you a successful conference. Thank you for listening.
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Climate Change Conference - Speach from Stavros Dimas, 31 October 2008
Prague (EU) - International and EU Action
Climate change has been described by UN Secretary-General Ban Ki-moon as the "defining challenge of our age" and is a challenge that is not going to simply disappear. Our generation will be remembered as the first to be offered solid scientific evidence of climate change. It is now our responsibility to ensure that we are also remembered as the generation which took decisive action to mitigate it – preventing the worst consequences and minimising the impact of consequences we could not avoid.
Some might think that we would do better to focus our attention on the financial crisis. Vigorous action is of course needed there too but we must not repeat the mistakes of the past. The current financial crisis is largely a story of warnings unheeded or dismissed. Being late in responding to climate change would be even more devastating – and far more costly.
The European Union has a clear vision for leadership on international action to address climate change, based on the recommendations of the Intergovernmental Panel on Climate Change. The international community must act now to limit the increase in global temperature to no more than 2 degrees Celsius above pre-industrial levels. Next year's meeting of the UNFCCC in Copenhagen must reach an agreement to put the world on a path to that target.
The future international agreement will need to build upon the Kyoto Protocol. Kyoto was the first step, but we must now change gear: far more ambitious emissions reduction commitments are needed from developed countries, and emerging economies also need to take action.
European Union leaders agree that transforming Europe into a highly energy-efficient, low-emission economy will bring countless benefits. It will spur innovation and give us a head start on the road to a low-carbon future. That is why they committed to reducing EU emissions by at least 20% compared to 1990 levels by 2020, whatever the outcome of the negotiations on a global agreement, and by 30% as a contribution to a broader global effort. Quite simply, we know that this is in our interest: it's a win-win scenario that will make Europe a stronger global player.
Last January, the Commission proposed a major package of legislation to implement these climate and renewable energy targets. I am confident that the hard work of the Parliament and the Council of Ministers, with the support of the Commission, will result in an agreement by the end of this year. Timing is important for the credibility of the EU's negotiating position in the lead up to Copenhagen. Europe must be able to show that it is able and willing to put in place the concrete actions that are needed to achieve ambitious emission reductions.
Let me highlight three aspects of the package that are of particular relevance for the international negotiations.
First of all, our Emissions Trading System. This is the EU's key tool for achieving emission reductions at least cost and we are convinced that the global carbon market must play a central role in a post-2012 climate agreement. In particular, this means reinforcing the role of the Clean Development Mechanism and innovative carbon market mechanisms.
Secondly, our energy policy. By boosting renewable energy, energy efficiency and carbon capture and storage, Europe is paving the way for the technologies the world will need to achieve deep emission cuts. The package will also reduce Europe's imports of oil and gas, increasing energy security while stimulating economic growth and job creation. It therefore strengthens Europe's competitiveness for the future.
Thirdly, the package is based on the principles of solidarity, cost effectiveness and fairness. With concrete suggestions tailored to the particular circumstances of different countries, we are putting into practice the UNFCCC principle of "common but differentiated responsibilities and respective capabilities." In the context of a new international climate agreement, this approach could serve as a model for a fair distribution of the effort among economically diverse countries.
By implementing concrete measures to implement our ambitious targets, the EU will be demonstrating its leadership in tackling climate change and demonstrating that a brake on emissions need not also mean a brake on growth. This leadership will be vital to rally support for an ambitious global agreement, just as it was to start the negotiating process in Bali last December.
This autumn, the international negotiations will move from the analytical phase into full negotiations.
Leadership needs to come first from developed countries, in the form of commitments to ambitious emission reduction targets after 2012. The EU contribution needs to be followed by comparable efforts from our partners. This is a challenge, but I am convinced that they will eventually commit to ambitious domestic climate action. This will also involve the United States. I can report that intense discussions are currently under way in both the Obama and the McCain camps, preparing positions for the new US Administration. I remain confident that the US will fully engage in the negotiating process and play their part in enabling a deal to be reached in Copenhagen.
At the same time, developing countries too need to set up ambitious national mitigation strategies, in line with their sustainable development objectives, and according to their capabilities. Recent scientific research shows that developing countries as a group would have to reduce their emissions by 15 to 30% below business as usual if we want to stay within the two degrees threshold. We will only succeed in the battle against climate change if we can persuade emerging economies to be part of a global effort that recognises their different responsibilities and roles. Major players such as China and India are gradually putting in place climate and energy policies. We need to encourage them further and support such moves, both bilaterally and multilaterally.
International finance must also respond to the climate challenge. That is one reason why the current debate about the use of auctioning revenues from the ETS is highly relevant for the international architecture of the coming agreement.
Ladies and gentlemen,
No one said the road to Copenhagen would be easy. But the agreement we all hope to reach in Copenhagen next year represents the last chance to bring climate change under control before it is too late. There is progress, but we need to step up the pace. With resolve, cooperation and imagination, we can conclude an agreement at the end of next year, delivering the ambitious global action that is needed.
I will finish by wishing you a successful and inspiring conference. I am looking forward to listening to the views of the coming speakers and I am sure that the conference will provide us with a strengthened sense of urgency to act on climate change, and help us seize the opportunities offered by this momentous challenge. Thank you.
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Community Independent Transaction Log, 16 October 2008
Brussels (EU) - Connection of the CITL and Member State registries with the UNFCCC International Transaction Log (ITL) has been completed on 16 October 2008.
The European Commission, Member States and the secretariat of the United Nations Framework Convention on Climate Change (UNFCCC) completed the live connection between the CITL, the UNFCCC International Transaction Log (ITL) and Member State registries on 16 October 2008. The CITL re-started processing transactions as planned on Thursday 16 October 2008, at 8:00 AM (CEST). Now all Member State registries are operational, with the exception of Romania which will remain offline for several more days in order to allocate allowances to its installations.
A comprehensive revision to the Commission Regulation on the standardised and secured system of registries for the EU Emissions Trading Scheme (EU ETS) has now been published. This revision, which revises the EU ETS registry architecture from 1 January 2012 onwards, will assure the independence of the EU ETS which will facilitate the inclusion of aviation activities from 2012 and the ability of the EU ETS to link to other emissions trading systems. It repeals and replaces the existing Registry Regulation no. 2216/2004/EC with effect from 1 January 2012.
The EU greenhouse gas Emissions Trading System covers around 10,500 installations across the 27 Member States of the European Union plus Iceland, Liechtenstein and Norway which are required annually to surrender emission allowances equal to their emissions in the previous year. It is the world's largest CO2 trading system and forms the cornerstone of the EU's strategy for meeting its emission reduction targets cost-effectively.
The Community Independent Transaction Log (CITL) records the issuance, transfer, cancellation, retirement and banking of allowances that take place in the registry.
It is mandatory for each Member State to have a national registry. The number of registries that have gone online can be seen from the following web site: CITL. These registries will ensure the accurate accounting of all units under the Kyoto Protocol plus the accurate accounting of allowances under the Community scheme for greenhouse gas emission allowance trading. Not only companies but also natural persons may open an account, anywhere in an EC registry.
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Emissions Trading: Commission to connect EU with UN carbon credit registry before December, 11.08.2008
Brussel (EU) - The European Commission, Member States and the United Nations Framework Convention on Climate Change (UNFCCC) Secretariat have successfully completed all the testing required for connecting to the UN's international carbon credit registry. The EU's Community Independent Transaction Log (CITL) and Member State registries will be connected to the UN's International Transaction Log (ITL) before December 2008 at the latest. The link will mean carbon credits issued under the Clean Development Mechanism can be transferred to the registries of EU Member States.
Environment Commissioner Stavros Dimas said: "I welcome the successful outcome of the testing phase. This now paves the way for the transfer of credits from the Clean Development Mechanism into the EU registry system. Linking up with the UN's carbon credit registry will further strengthen Europe's leading role in the global carbon market."
Two systems working together
The EU's Community Independent Transaction Log (CITL) and the UN's International Transaction Log (ITL) are electronic accounting systems which keep track of emission allowances or carbon credits of companies participating in the carbon market. The CITL, which has been operational since 2005, is the central registry for tracking ownership of allowances in the EU Emissions Trading System (EU ETS). The International Transaction Log (ITL) keeps track of various types of UN credits from countries that have signed up to the Kyoto Protocol.
The linking of the two systems will enable companies to transfer certified emission reductions (CERs) issued under the Clean Development Mechanism into their accounts in Member State registries. The Clean Development Mechanism (CDM) allows countries with an emission reduction commitment under the Kyoto Protocol to implement an emission reduction project in developing countries. These projects earn saleable certified emission reduction (CER) credits, each equivalent to one tonne of CO2, which can be counted towards meeting Kyoto targets. As CERs can be used to offset emissions under the EU ETS, the link is crucial to ensure that operators have access to an adequate supply of carbon credits.
The two systems will control and track transactions jointly. Currently, each Member State registry is connected to the CITL. After the ITL and CITL are connected, each Member State registry will be connected to the ITL only and each transaction involving an EU Member State will be passed on to the CITL for recording and additional checks.
Testing successfully completed
The European Commission, Member States and the UNFCCC Secretariat have carried out two rehearsals to test technical procedures. The first test-run, which took place from 15 to 30 May, involved five Member States. The second rehearsal, from 18 July to 4 August involved all Member States, as well as non-EU registries in Russia, Japan and New Zealand. These tests have now been successfully completed.
Next steps
The Commission is currently working with the UNFCCC Secretariat to fix the precise date for the official connection, which will be announced shortly. During the connection procedure, the Commission and Member States will suspend all registry operations for a maximum period of seven calendar days.
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Climate Change: Commission launches public consultation on post-2012 agreement, 08.08.2008
Brussel (EU) - The European Commission launches today a public consultation on the European Union's approach to a global climate change agreement up to and beyond 2012 when the current Kyoto Protocol targets will end. Stakeholders and the general public are invited to put forward their views on a number of critical issues, such as mid-term emission reduction targets for developed countries and emission reduction actions for developing countries, adaptation to climate change, technology cooperation and finance. The results of the survey will help shape the EU's position on the global post-2012 agreement.
Environment Commissioner Stavros Dimas said: "It was agreed in Bali last year that a new global climate change agreement should be adopted by the end of 2009. The ambitious agreement that needs to be reached in Copenhagen must bring together the world's nations to tackle this global challenge effectively. It is important that our contribution to this discussion is shaped by the knowledge and expertise of the different EU stakeholders."
The Commission launches today a public consultation on the approach the European Union should take on the global post-2012 climate change agreement. The consultation follows the Commission's Communication "Limiting Global Climate Change to 2° Celsius: The way ahead for 2020 and beyond". Stakeholders are being asked for their views on the different building blocks of the Bali Road Map. These include a shared vision guiding commitments to mid-term targets by developed countries and greater collaboration on emission reduction and adaptation to climate change with the support of technology and finance.
The Commission welcomes comments from all interested parties, including individual citizens, industry, trade unions and consumer representatives, interest groups, the NGO community and other organisations. A conference for stakeholders is planned for autumn this year. The consultation runs until 29 September 2008. Interested stakeholders are invited to participate by filling in the online questionnaire at:
http://ec.europa.eu/yourvoice/ipm/forms/dispatch?form=climatepost2012
Background
The Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) was a vital first step in addressing the serious threat of climate change. Under the Kyoto Protocol, the EU committed itself to reducing its greenhouse gas emissions by 8%, compared to 1990 levels between 2008 and 2012. In December 2007, at the UN conference on climate change in Bali, Indonesia, participating countries set out an action plan for an agreement on a post 2012 framework, to be completed by 2009 when the parties of the UNFCCC meet in Copenhagen.
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CARBON EXPO reinforces its leadership role in the carbon market, 09.05.08
Cologne (Carbon EXPO) - 3000 visitors – an increase of more than 20 percent – attended the carbon market’s leading global fair and conference in Cologne, Germany.
258 exhibitors from more than 60 countries and 3000 visitors from more than 115 countries accepted the invitation of the organisers Koelnmesse, the World Bank and the International Emissions Trading Association (IETA), to share experiences and gain knowledge of current topics and trends, technologies, projects and services at this years CARBON EXPO. The EXPO recorded a more than 16 percent increase in exhibitors and a 20 percent increase in the number of visitors (2007: 222 exhibitors, 2.419 visitors).
New World Bank figures show that the international emissions market continues its rapid growth. Announced at CARBON EXPO the global market doubled in 2007 and now totals US $ 64 billion (€47 billion). EU-emission rights trading amounts to US $ 50 billion (€37 billion).
In light of these positive developments and the continuing enormous growth figures of the global carbon emission reductions market, Koelnmesse, the World Bank and IETA expressed their delight at the outcome of CARBON EXPO in a joint statement:
“With this fifth CARBON EXPO, the trade fair and conference has once again demonstrated its leading international position and provided an ideal and flexible platform for the dynamic climate protection market. We are pleased that we could again offer the optimum venue under one roof to unite the market–companies, western governments and developing countries”, the organisers’ declared in a joint statement. Around 3000 visitors attended the plenary sessions, 22 workshops and 50 side events divided into three segments “Project Stream”, “Traders Stream”, and “New Markets Stream“. 150 leading carbon market experts, practitioners, developer and market movers attended Carbon Expo and shared their expertise. All aspects of the explosively growing carbon market were discussed – including expansion to the United States, Australia and around the world, new technologies like carbon capture and storage, green investment schemes (GIS), auctioning and allocation, trading action, pricing trends and future developments in both the current period and post-2012.
Global market of US $ 64 billion (€47 billion)
This year’s fifth CARBON EXPO began with a World Bank press conference releasing the eighth “State and Trends of the Carbon Market” report together with IETA´s third edition of the “GHG Market Sentiment Survey” in front of over 100 representatives from the international press. According to the state of the carbon market report, the global carbon market has increased from US $10 billion in 2005 to over US $30 billion in 2006, and has again doubled in 2007 to approximately US $64 billion dollars. In the past two years, the financial volume has actually sextupled. Excerpts from the report state that the European Union Emission Trading Scheme (EU ETS) also saw a doubling of both value and number of permits traded to the tune of US$50 billion (€37 billion).
The report’s data shows that the global carbon market doubled or tripled in value for all segments, except for projects in developing countries which saw a levelling off of market volumes transacted under the Clean Development Mechanism (CDM) – from 537 million tons of carbon dioxide equivalent (MtCO2e) in 2006 to 551 MtCO2e in 2007.
“Sixty-eight developing countries participate in the CDM, among them Jamaica, Kenya, Mali and Madagascar, which offered climate-friendly projects for the market for the first time in 2007. But, at a time that global cooperation to reduce the risk of climate change is more important than ever before, the prospects for developing countries benefiting from the carbon market are in question. It would be a shame for the world to lose this momentum now”, said Karan Capoor, senior World Bank carbon markets expert and co-author of the “State and Trends of the Carbon Market Report 2008“.
The IETA “GHG Market Sentiment Survey” shows continuing confidence in increasing future price levels, but some concern over the ongoing international negotiations.
CARBON EXPO 2009 heads for Barcelona
The success story that is CARBON EXPO will continue from 27 – 29 May 2009. Together with their new partner Fira Barcelona, the World Bank, the International Emissions Trading Association and Koelnmesse will organise CARBON EXPO 2009 in the Spanish city of Barcelona.
“Spain is a major player in the carbon market and right from the start in 2004 has been one of the biggest joint exhibitors at CARBON EXPO. The World Bank, IETA and Koelnmesse are convinced that cooperation with our Spanish colleagues will produce new synergies for the carbon market. The support of the Government of Spain, for both the carbon market and CARBON EXPO, will help to ensure the success of the Barcelona venture,” the CARBON EXPO organisers declared in a joint statement.
In 2010 CARBON EXPO will take place in Cologne from 26 – 28 May again.
CARBON EXPO 2008 in figures
At CARBON EXPO 2008 there were 258 exhibiting companies from 60 countries on a gross exhibiting area of 9400 m², with foreign participation at 83%. 3000 visitors from 115 countries came to CARBON EXPO 2008; here too there was an international focus with around 80% foreign visitors*. The next CARBON EXPO will take place from 27 - 29 May 2009 in Barcelona. In 2010 CARBON EXPO will open its gates on the premises of the Koelnmesse in Cologne again from 26 to 28 May.
* All figures are calculated according to the guidelines of the Gesellschaft zur Freiwilligen Kontrolle von Messe- und Ausstellungszahlen (FKM) [Association for the Voluntary Control of Trade Fair and Exhibition Figures] and are subject to an audit by a certified accountant (http://www.fkm.de/).
“Carbon Expo is the event that all the carbon market players look for” Statements of exhibitors and participants:
• Michael Pollan (Investment Manager), European Carbon Fund
“It’s the biggest carbon fair ever. It’s the event that all the carbon market players look for. As you can see, it’s getting bigger every year; A successful fair. My respect.”
• Jan-Willem Martens (Associate Director), Barclay Capital
“You really meet everyone on the market. It’s a very good event.”
• Kerry Liebenberg (Managing Associate), Linklaters
“A lot of transactions have being concluded at this year’s show. And certainly, if you take a look at the number of representatives from each of the exhibitors, it is clear that there is a momentum.
• Ming Yee Lim (Environmental Products Business Developer), Shell International Trading
“Carbon Expo is a very good event. We had the chance to talk with so many potential players.”
• Bilal Anwar (Programme Officer, CDM Climate Change Secretariat), UNFCCC
“Everything is perfect, the meetings around, the atmosphere and the close distances. We have a lot of players here, really a lot of people.”
• Pablo Fernández Guillén Cambio Climático (Abt. Klimawandel), Endesa
“The Carbon Expo is for us the biggest event in the year. We have been here in all the five editions, we have seen it growing and now it’s the place for us to meet everybody.”
Note for the media: More information about the trade fair and the conference, with pictures and information on media services can be found at http://www.carbonexpo.de/ in the Press section or by calling +49 221 821-3051 or faxing +49 221 821-3446.
Additional information about the World Bank’s carbon finance initiatives can be found on the Internet at http://www.carbonfinance.org/.
More information on IETA can be found at http://www.ieta.org/.
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CARBON EXPO 2008 7-9 May Cologne already 150 exhibitors and 800 attendees participating!
CARBON EXPO 2008 – the world’s leading annual platform for the Carbon Market
• Around 240 exhibitors and 2600 participants expected
• 110+ countries represented
• Around 190 medias present
Simply click here to register and be part of it!
Global Trade Fair:
• Platinum and Gold Packages already sold out
• Still some Silver and Bronze packages left
• Simply click here for more information and registration form
International Conference:
• 150+ high level speakers from around the world
• 6 Plenaries and 22 Workshop Sessions divided into Project Steam, Traders Steam and New Markets Stream
• Conference Highlights:
- CDM for tomorrow – Promises to keep
- CARBON EXPO Round Table Debate – Are markets delivering?
- Status of the EU ETS and Review
- Financial institutions: re-shaping the Carbon Market
- JI: Can we make it work?
- Future of the Asia Pacific Market
- Elements of the US GHG Policy
- Linking, CCS, Voluntary Market, Transportation, REDD, JIS, Accounting and Taxation and a lot more…
Click here for complete Conference Program overview
Alongside the conference program, 40 Exhibitor Side Events offer intimate networking environment combined with specialized speakers
Practical Information:
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“Meet the Carbon Market evening event“, 7 May 2008, at the Rheinterassen
At “Meet the Carbon Market” all of the Trade Fair and Conference participants meet at the Rheinterrassen restaurant with an amazing view of the Rhine, the old city centre and cathedral. A excellent atmosphere in which you will enjoy a relaxed evening with the Carbon Market Community.
Don’t forget to buy your ticket!
Just make sure to be there…we will make the rest!
Simply click here to register.
Your CARBON EXPO Team
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Important steps taken to expand CDM in Africa, much remains to be done – Nairobi Framework partners, 06 December 2007
Nusa Dua (UNFCCC) – A good start has been made to extend the benefits of the clean development mechanism (CDM) to Africa, but a great deal more remains to be done, and much more is needed in terms of donor support, say representatives of the five agencies implementing the Nairobi Framework aimed at spreading the benefits of CDM. “There are 850 clean development mechanism projects in 49 developing countries, but only 23 of those projects are in Africa. It’s time that the benefits of this important Kyoto Protocol mechanism were expanded in Africa,” said Yvo de Boer, Executive Secretary of the UNFCCC and the UN’s top climate change official.
Under the CDM, projects that reduce greenhouse gas emissions and contribute to sustainable development can earn saleable certified emission reduction credits (CERs). Countries with a commitment under the Kyoto Protocol can use the CERs to meet a portion of their obligations under the Protocol. A year after then Secretary-General Kofi Annan launched the Nairobi Framework, aimed at spreading the benefits of CDM to more countries, several more projects have been launched in Africa. Still, projects in Africa account for just 2.6 per cent of all CDM projects. The United Nations development Programme (UNDP), United Nations Environment Programme (UNEP), the World Bank, African Development Bank and the United Nations Framework Convention on Climate Change (UNFCCC) secretariat have joined forces to implement the Nairobi Framework, and bring to life the expressed aspirations of Parties to scale up CDM in Africa. They have written a comprehensive project proposal for which they are seeking donor support.
“UNDP considers climate change to hit at the very heart of its development mission. Climate change threatens to seriously undermine efforts to eliminate poverty and reach the Millennium Development Goals, particularly in the least developed countries,” said Yannick Glemarec, Executive Coordinator of the UNDP for the Global Environment Facility. The first concrete outcome under the Nairobi Framework is a joint UNDP–UNEP six-country CDM capacity development project in sub-Saharan Africa initiated in September 2007. The project – managed by a UNDP Regional Project Coordinator based in Addis Ababa – covers Ethiopia, Kenya, Mauritius, Mozambique, Tanzania and Zambia, and was launched in October. The Governments of Spain, Sweden and Finland have contributed a total of USD 1.5 million to the project.
"In Africa, efforts to capture CDM benefits are accelerating, supported by a number of individual and joint UN efforts. Overcoming the complexity of the CDM and general investment barriers, however, cannot be done overnight, but our sustained efforts are producing results," said John Christensen, Head of UNEP RISOE Centre, based in Denmark. Konrad von Ritter, Sector Manager for Sustainable Development at the World Bank
Institute, pointed to real accomplishments in the past year. “There has been a notable increase in capacity-development resulting in a pipeline of 30 CDM projects. Of these, 14 have already signed emissions reduction purchasing agreements with World Bank carbon funds. While this is positive we all know that more needs to be done, and therefore the critical importance of the Nairobi Framework to scale up capacity development,” Mr. von Ritter said.
About the UNFCCC
With 191 Parties, the United Nations Framework Convention on Climate Change (UNFCCC) has near universal membership. It is the parent treaty of the 1997 Kyoto Protocol, which has to date 175 member Parties. Under the Protocol, 36 States, consisting of highly industrialized countries and countries undergoing transition to a market economy, have legally binding greenhouse gas (GHG) emission limitation and reduction commitments, while developing countries have nonbinding obligations to limit emissions. The ultimate objective of both treaties is to stabilize GHG concentrations in the atmosphere at a level that will prevent dangerous human interference with the climate system.
About the CDM
There are currently more than 850 registered CDM projects in 49 countries, and about another 2000 projects in the project registration pipeline. The CDM is expected to generate more than 2.6 billion certified emission reductions (tradable CERs) by the time the first commitment period of the Kyoto Protocol ends in 2012, each equivalent to one tonne of carbon dioxide.
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US Under Pressure at Climate Conference, 06 December 2007
UNFCCC - American negotiators at a climate conference came under mounting pressure Thursday to back mandatory caps on greenhouse gases, after Australia threw its support behind deep emission cuts and anti-global warming legislation passed a crucial test in the U.S. Senate. The United States, the world's largest producer of gases blamed for rising global temperatures, has resisted calls for binding limits on emissions at the U.N. conference on Bali island, which is aimed at launching negotiations for a world climate agreement to replace the Kyoto Protocol when it expires in 2012. Australia, which had stood with the United States as the only other industrialized country to reject the Kyoto pact, reversed itself this week and signed it. Despite the pressure, Washington stood firm on Thursday in its refusal to sign the agreement, with Undersecretary of State Nicholas Burns, the No. 3 American diplomat, reiterating its stance in a series of appearances and interviews in Australia.
"We do not see eye-to-eye with Australia or many other countries on the signing of Kyoto, that's obvious," Burns said in a question-and-answer session after an address in Sydney. "But we do agree that it is critical, it is vital that we try to agree on a post-Kyoto global regime to reduce carbon emissions." Back home, the Bush administration's position suffered another blow when the Senate Environment and Public Works Committee on Wednesday passed a bill calling for the United States to cut gas emissions by 70 percent by 2050 from electric power plants, manufacturing and transportation. The bill now goes to the full Senate. It was the first bill calling for mandatory U.S. limit on greenhouse gases to be taken up in Congress since global warming emerged as an environmental issue more than two decades ago. Republican critics of the bill argued that limiting the emissions could become a hardship because of higher energy costs. The Senate move, along with Australia's reversal, cheered environmentalists and others in Bali clamoring for dramatic action to stop global warming. "This is a very welcome development," Alden Meyer, of the Union of Concerned Scientists, said. "It shows the increasing isolation of the Bush administration in terms of U.S. policy on this issue."
David Waskow, of Oxfam, which provides food and other humanitarian aid to the hungry, said the Senate legislation was a positive signal to developing nations and others in Bali that are looking for America to take a more active role in battling climate change. "It's one of the things that point the way to having the United States re-engage in the negotiations, and really I think in many ways demonstrates the U.S. leadership on these issues," Waskow said. "The administration may not be there, but it's increasingly clear that the United States is, as a country." The current Kyoto plan commits 36 industrial nations to cut emissions by an average 5 percent below 1990 levels by 2012. While the two-week conference is in its early days, differences already were emerging, mostly over what should go into the "Bali roadmap," which will lay out the subjects for discussion in the years to come.
The United States, joined by ally Japan, is proposing that the post-Kyoto agreement favor voluntary emission targets, arguing that mandatory cuts will threaten the economic growth that generates money needed to fund technology to effectively fight global warming. The European Union, on the other hand, has come out with a detailed wish list that would have industrialized countries take the lead in approving binding cuts, in addition to strengthening the carbon-offset market and boosting funds to help poor countries adapt. The Australian delegation endorsed a recent U.N. document that, among other things, speaks of cutting greenhouse gas emissions by between 25 percent and 40 percent below 1990 levels by 2020. The EU has already pledged 20 percent cutbacks by 2020, and 30 percent cuts if the U.S. joins in.
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Bali talks won't agree carbon capture, 05.12.2007
NUSA DUA (UNFCCC) - Current talks in Bali on climate change will not decide to include support for the burying of greenhouse gases as part of a successor deal to the Kyoto Protocol, the U.N.'s top climate official said. But the talks may put the so-far unproven technology, carbon capture and storage, on the agenda for future backing, Yvo de Boer told Reuters in an interview on Tuesday. About 190 countries are meeting in Bali, Indonesia, aiming to launch two years of talks to agree a new global climate change pact to succeed the Kyoto Protocol after 2012. "I think there's still quite a lot of concern out there about carbon capture and storage," said de Boer. "I think more pilot projects have to be done, more analytical work has to be done really to convince the skeptics that this is a technology that can be safely applied." "It (the Bali talks) might put CCS on the agenda as one technology to be considered as part of a mitigation solution." Carbon capture technology is widely believed to be a crucial weapon without which emissions of the commonest man-made greenhouse gas, carbon dioxide (CO2), may pass dangerous limits.
The technology is supposed to trap emissions from coal-fired power plants, which are proliferating globally, and pump the gas underground. But there is no such commercial-scale power plant project yet anywhere. That is because of the extra expense to install CCS technology, estimated at some $1 billion per plant. One idea is that, under a new global climate deal, rich countries could meet their emissions limits by funding carbon capture projects in developing nations, earning carbon offsets in return. Because no new commercial-scale CCS projects are expected to be operational for several years, the technology is only relevant to a Kyoto successor deal.
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Africa: "Political Will" Needed to Change Climate, 05.12.2007
Johannesburg ( UNFCCC) - Officials stressed the need for "political will" to stem the impact of global warming as the United Nations Climate Change Conference got underway on the Indonesian island of Bali on 3 December.
The joint meeting of the 192 Parties to the United Nations Framework Convention on Climate Change (UNFCCC) and the 177 Parties to the Kyoto Protocol are expected to prepare the ground for a new deal on climate change to be put in place after 2012. This is when the first phase of the Kyoto Protocol, a commitment made in 1997 by 36 industrialised countries to reduce greenhouse gas emissions by at least five percent against a 1990 baseline, expires.
Reports by the Intergovernmental Panel on Climate Change (IPCC) have warned that if greenhouse gas emissions are not cut by at least 30 percent in the next 10 to 15 years, global temperatures would increase by two degrees Celsius, which will destroy 30 to 40 percent of all known species, and bring bigger, fiercer and more frequent heat waves, floods and droughts.
"A large part of the solution is available to us today; what we need is political will," said Yvo de Boer, UNFCCC Executive Secretary at a press briefing on 2 December in Bali. "The big question for me is: 'Ministers, what is your political answer to what the scientific community is telling you so very clearly?'" IPCC chair Rajendra Pachauri told IRIN, "I am generally optimistic, but you need political leaders who will take the initiative."
The conference kicked off on a positive note with the newly elected Australian Prime Minister, Kevin Rudd, ratifying the Kyoto Protocol on 3 December, leaving the United States, the world's largest emitter of greenhouse gases, isolated as the only industrialised country that has not signed. The US objected because the Kyoto Protocol excluded China and India, two of the world's fastest growing economies.
Lengthy applause greeted news of Australia's ratification, which de Boer hailed as "very significant political decision" and said it reflected appreciation for the courage shown by Australia in dramatically shifting its position and engaging more strongly with the international community on climate change, which boded well for the country's future role in the negotiations.
The biggest single barrier to that is the role the US administration has played in wrecking the climate negotiations, but we cannot wait for the US administration; the EU and others must lead, because we just cannot afford to wait
"Each country must take its fair share of responsibility for tackling the problem in the second commitment period [post 2012]," said Shane Rattenbury, Political Director of Greenpeace International. "The biggest single barrier to that is the role the US administration has played in wrecking the climate negotiations, but we cannot wait for the US administration; the EU and others must lead, because we just cannot afford to wait."
At the press briefing De Boer noted a number of recent positive political developments: the European Union has announced a commitment to reduce emissions by 20 percent by 2020; the G8 has called for negotiations on a future climate deal to be concluded by 2009, when the next meeting of all parties to the UNFCCC takes place in Copenhagen, Denmark.
Indonesian Environment Minister and President of the conference, Rachmat Witoelar, commented in his opening remarks on 3 December that while "the launch of negotiations and a clear deadline of 2009 to end the negotiations would constitute a breakthrough, anything short of that would constitute a failure."
Other issues
There are four main "blocks" on the conference agenda: mitigation (action to limit or reduce emissions); adaptation (putting in place a strategy to help developing countries adapt to the impacts of climate change); technology (helping countries limit or reduce emissions and adapt to the impacts of climate change by supplying technology; financial support to help developing countries act on mitigation and adaptation.
Other important issues include deforestation, recognised as a key driver of climate change that accounts for up to 20 percent of global carbon dioxide emissions. The aim is to launch pilot projects in developing countries that will enhance their capacity to reduce emissions from deforestation.
The Clean Development Mechanism, one of three mechanisms in the Kyoto Protocol that offer rich countries the choice of reducing emissions at home or in developing countries, with benefits for both parties.
"Action in the North is needed to fuel clean growth in the South," de Boer said in his opening address on 3 December. "While it is clear that we will need to continue using fossil fuels for some time to come, we can't afford conventional technologies to continue to keep a grip on the world."
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UN kicks off Bali climate change conference, 04.12.2007
BALI (UNFCCC) - About 10,000 delegates from nearly 190 countries are in Bali today for a massive UN conference on climate change. The focus of the conference is to begin negotiations on an international agreement to fight climate change after 2012 -- when the first commitment period of the Kyoto Protocol expires.
The main goals of the conference are to:
- launch negotiations on a climate change deal for the post-2012 period
- set the agenda for the negotiations
- reach agreement on when these negotiations will have to be concluded.
"The eyes of the world are upon you. There is a huge responsibility for Bali to deliver,'' said Yvo de Boer, the executive secretary of the conference. "The world now expects a quantum leap forward.'' In an effort to get the talks started on a positive note, Indonesia planted millions of trees to soak up the estimated 50,000 tonnes of greenhouse gases expected to be created by delegates flying to Bali to attend the conference.
A key aim of the conference will be to ensure that the United States signs on to any new agreement. The American delegation in Bali has said it would not work as a "roadblock" to a new agreement. However, the U.S. remains opposed to certain measures - such as mandatory emissions cuts by wealthy nations and a target for limiting the rise in global temperatures - that are supported by many countries in attendance.
On Monday, Australia signed papers to ratify the Kyoto Protocol climate pact - leaving the U.S. as the only industrial power to not have joined.
The U.S. is the world's number one emitter of greenhouse gases. "There's going to be a lot of pressure now and the Bush administration is increasingly isolated on this with now the Australians leaving them," Dale Marshall, of the David Suzuki Foundation, told CTV Newsnet on Monday. On Sunday, Canada's Environment Minister John Baird said any deal needs to include the world's major producers of greenhouse gases. "We want to negotiate an agreement that's tough and effective and brings in all the big players," Baird told CTV's Question Period, adding that failure is not an option.
The Harper government's plan would see Canada cut its emissions by 20 per cent by 2020. However, the Tories use 2006 as a baseline, not Kyoto's 1990 baseline. Climate analysts say under the Harper plan, Canada wouldn't reach its Kyoto target of a six per cent cut below 1990 levels by 2012 until 2020. Liberal Leader Stephane Dion has said that he will attend the conference despite the fact that the Harper government has not invited any opposition members. Dion has said that the Harper government is attempting to sabotage the Kyoto Protocol, and has written a letter asking that it reverse its decision on opposition participation. But Baird said that Dion has already had his chance to deal with climate change as a member of the previous Liberal government and failed to take action. "Since Kyoto was signed 10 years ago, under Stephane Dion's leadership, greenhouse gases went up by 35.9 per cent," he said, "We have one of the worst records in the developing world. I think Canada can do a lot better."
The Tories have appointed former Parti Québécois premier Pierre-Marc Johnson to lead its advisory team at the conference, reports The Globe and Mail. Johnson, premier for part of 1985, could help the Conservatives build support in Quebec. The Tories have faced criticism in the province for their position on Kyoto -- that its objectives are unattainable -- and for opposing binding commitments to cut greenhouse gas emissions in developed nations. "It's not who's sitting in Canada's chair, it's what are the positions," Marshall said from Bali. "Right now, the international position for Canada is quite weak and we don't have a lot of credibility, frankly, given our weak domestic policies."
The UN wants an agreement on a replacement pact for Kyoto to be decided by 2009 so that it can be implemented in time. The conference continues until Dec. 14.
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ifw: Taxes or Emissions Trading in Post-Kyoto Regimes? 02.12.2007
Kiel (Institute of the World Economy) - The distribution of real or perceived costs and benefits of reducing greenhouse gas (GHG) emissions will play a crucial role in upcoming negotiations on a Post Kyoto climate regime. The distribution of these costs depends to a large degree on the choice of the policy instrument for effectively reducing emissions such as a harmonized international carbon tax or a “cap-and-trade” emissions trading system with different rules for allocating the emission allowances.
Some of these rules might lead to a distribution of costs particularly for major developing countries including China and India that might not be acceptable to them and thus fail to provide incentives for these countries to participate. This is the result of the working paper No. 1380 “Distribution Matters – Taxes vs. Emissions Trading in Post Kyoto Climate Regimes” by Sonja Peterson and Gernot Klepper released recently by the Kiel Institute for the World Economy.
When the Kyoto Protocol finally came into effect in the spring of 2005, the first international GHG-emission regulations became binding. But, besides the fact that it is unclear whether the emissions targets will be met, the major GHG-producing industrialized nation, the United States, have not ratified the Protocol, meaning that they are not bound to its terms. In addition, rapidly growing Asian countries such as India and China are currently exempt from emission reduction regulations, even though China is in the process of surpassing US emissions levels.
The increasing share of the big developing countries in GHG emissions and the nonparticipation of the United States, together with the recent evidence for a faster than expected climate change that can be found in the fourth assessment report of the IPCC have made clear that a Post-Kyoto agreement needs to include the biggest emitters of GHGs. The forecast that by 2030 developing nations will account for more than 50 per cent of GHG emissions makes the necessity of including developing nations in any Post-Kyoto agreement even more clear. Also obvious is the fact that an agreement can only be reached if it provides a fair distribution of emissions reduction responsibilities, and some sort of real or monetary incentives in order to be internationally accepted.
Peterson and Klepper conduct a quantitative assessment of the distribution of the costs of climate policies by comparing a harmonized international carbon tax with two variants of a cap-and-trade system: The first requires reductions in all countries by the same percentage relative to some historical reference year (“grandfathering rule”), the second allocates emission rights in such a way that over time the rights are distributed among countries according to the size of their population. This proposal – it has been also called the “Contraction and Convergence” approach – eventually leads to a system where every person receives the same emission right. This last proposal has recently been introduced by the Chancellor of Germany into the international debate.
Peterson and Klepper find that a harmonized carbon tax tends to favour industrialized countries whereas it puts a relatively high burden on developing countries. The “Contraction and Convergence” approach of emission trading leads to welfare gains for countries like China, India, and the countries of sub-Saharan Africa whereas it imposes welfare losses upon industrialized countries which are larger than those under the grandfathering rule or a tax scenario.
Under all policy instruments the energy exporting regions such as the countries of the Commonwealth of Independent States and the Middle East face high welfare losses when compared to all other countries. Two forces are at work as the authors find out: The “Contraction and Convergence” assignment of emission rights gives developing countries large amounts of emission rights. At the same time they have comparatively low cost of reducing emissions. In sum, they can sell a significant amount of their emission rights to industrial countries and can thus use emission rights as an additional source of income. In fact, India and China are expected to sell about 30 to 35 percent of their emission rights to countries with higher abatement costs. At the same time Europe will import emission rights in the order of about one third of its reduction requirement thus avoiding the higher cost of meeting their emission target. This explains the gains of developing countries and the relatively low losses of industrialized countries.
The second force concerns the response of energy demand to the climate policy. Significant worldwide emission reductions can only occur if the demand for energy is reduced. This means that an important determinant for regional welfare changes – induced by the different climate policy instruments – is a country’s status as either an exporter or importer of energy. The reason is that a reduction in GHG emissions will automatically lead to lower net prices for fossil energy sources and thus to a welfare loss in energy exporting countries.
Peterson and Klepper stress the importance of the choice of policy instruments and their particular use in implementing a Post-Kyoto Climate Regime, but conclude that there is no policy instrument that looks immediately acceptable to all countries. However, they indicate that for a Post-Kyoto climate regime that intends to include the countries with the most emissions the “Contraction and Convergence” approach with emission trading could be a good starting point since it balances the overall cost of climate policies between the rich and the not so well-off countries and it simultaneously has the appeal of leading to a fair distribution of emission rights in the future.
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Societe Generale: Australia CER demand estimated at 18 million tonnes per year, 02.12.2007
Societe Generale commodity research has isssued the following carbon market report: Welcome Australia?
Phase II EUA for Dec08 delivery have made the big jump over Euro23/t early last week. Between November 19th and 20th the rise was almost Euro1. Since then market has been absorbing the fact and prices have remained by and large stable at around Euro23.7. Interesting to note is that we have tested the Euro24 level several times. While this has been only half-hearted until now, we might be on solid grounds to try that again. Last week momentum has been created by a bullish energy complex, with oil approaching $100 /b again but exchange gas stable in Europe. This week's could come from the aftermath of ITL-CITL announcements by the EC some days ago.
Phase I remained pretty much stable, despite the disturbing news that there might be double-counting (18 Mt?) in the quotas surrendered by ETS industrials in 2005 and 2006. The EC has denied this happened but, if confirmed, it could trigger some renewed purchase from people who would see these quotas cancelled, and also some speculation on the price rise. We do not think the price could increase to significant levels-even accounting for the ex-post adjustment by Germany some days ago, which would lead to 33 Mt retired eventually, there remains at least 30 Mt length in the Phase I market according to us.
Phase II curves have not really moved in any direction, and the 2008-2012 spread remains at Euro2.5 /t. Even if spreads are consistently traded in the market, the shape is not impacted as of now.
What about CER?
Three elements to report from last week. The first one is the sad communication by the EC that the link between the (now functioning) ITL and the CITL will be ready-no later than April 2009, a wording that maybe is intended to reassure operators but in practice might make them fear that there could be delays beyond this very important date. Despite the recent surge in prices around Euro18 /t in the wake of EUA, this could eventually have a bearish effect on CER, seen as more and more risky, and in turn a bullish one on EUA, which will be in more demand.
The second element is the disconnect in CER prices between Nordpool and OTC markets, with differences reaching Euro0.4 at some point last week. These differences are still difficult to account for and could be due to the still limited liquidity of CER on Nordpool, but also a difference in interpretation of the contract characteristics by participants - to be followed.
The third news is the election in Australia, where the Labour Party just won - and had promised to ratify Kyoto in case of victory. If this happens, what is the potential for CER purchase from this country over 2008-2012? Under Kyoto, Australia is allowed to increase its emissions by 8% against 1990 levels (about 507 Mt CO2e, so they can reach 547 Mt on a yearly average). Our view today is that the country, in a baseline scenario, would emit 583 Mt per year on average over 2008-2012 - a 1.5% yearly growth in emissions over 2004-2012. This means that Australia would be short of 36 Mt per year. Using the Kyoto supplementarity principle, which sets a principle upper limit on the use of CER from any country to meet its Kyoto target, this means a 18 Mt per year demand from Australia. Not massive (total CER demand for us would be in the order of 400-500 Mt per year), but not exactly bearish either. All the more so as the ratification, if effective, would now leave the US completely isolated on the climate scene, possibly accelerating things at this end too. So this comes in opposition to the ITL possible bearish impact, and could trigger a rush to CER- let us wait and see.
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Climate change: Bali conference must launch negotiations and fix ‘roadmap’ for new UN agreement, 28 November 2007
BRUSSEL (EU) - The UN climate change conference from 3 to 14 December in Bali, Indonesia must agree to launch negotiations on a comprehensive and ambitious global climate change agreement for the period after 2012, when the Kyoto Protocol’s first commitment period ends. This is the key objective of the Commission and EU member states following the alarming assessment of current and future climate change recently completed by the Intergovernmental Panel on Climate Change (IPCC). Environment Commissioner Stavros Dimas will participate in the high-level segment of the Bali conference from 12 to 14 December. This will be preceded on 8-9 December by a meeting of trade ministers on trade-related climate issues and on 10-11 December by a meeting of finance ministers on funding for low-carbon technologies.
“The scientific evidence of climate change highlighted by the IPCC is compelling and alarming,” Commissioner Dimas said. “The only responsible reaction is to step up global efforts to limit emissions of greenhouse gases. That is why in Bali we must agree to launch negotiations on a global and comprehensive climate agreement and define a ‘roadmap’ setting out its main components. The conference must also fix the end of 2009 as the deadline for completing the negotiations.
He added: “The goal of the future agreement must be to limit global warming to no more than 2ºC above the pre-industrial temperature so we can prevent the most devastating impacts of climate change. The Bali meeting is a key opportunity to agree on this level of ambition to guide our negotiations over the next two years.”
The EU’s position was agreed by the Council of environment ministers on 30 October. The EU proposes that a post-2012 climate agreement should contain eight key ‘building blocks’:
Limiting global warming to 2ºC above the pre-industrial temperature. Respecting this limit will require global emissions to stop rising within the next 10 to 15 years and then be reduced to at least 50% below 1990 levels by 2050.
Deeper mandatory absolute emissions reductions by developed countries. The EU is proposing that developed countries collectively reduce emissions 30% by 2020 and 60-80% by 2050 compared with 1990 levels. Pending agreement on this, the EU has made an independent commitment to reduce its own emissions by at least 20% by 2020. The Commission will propose a package of legislative measures to achieve this early in 2008.
Fair and effective contributions by other countries, especially the rapidly emerging economies, that limit the emissions intensity of their economic growth;
Strengthening and extending the global carbon market, including through innovative and enhanced flexible mechanisms. The EU Emissions Trading System (EU ETS) has shown that the carbon market works.
Increasing cooperation on research, development and deployment of the clean technologies needed to reduce emissions;
Enhancing efforts to address adaptation to climate change. Cooperation to tackle the unavoidable impacts of climate change needs to be strengthened, particularly to help the poorest and most vulnerable countries.
Addressing emissions from international aviation and shipping. The EU is already discussing the inclusion of aviation in the EU ETS.
Reducing emissions from deforestation, which is responsible for up to 20% of global CO2 emissions.
Discussions on post-2012 action on climate change were launched two years ago and the EU believes it is now imperative that this process be turned into concrete negotiations on a new global agreement.
One 'track' of these discussions has been an informal dialogue on long-term cooperative action among the 192 Parties to the UN Framework Convention on Climate Change (UNFCCC). This dialogue will formally end in Bali and the EU wants to see this followed up by a formal negotiating process covering all the building blocks of a future agreement. On a second, parallel track the 176 Parties to the Kyoto Protocol are discussing new emission reduction targets for industrialised countries to succeed the 2008-2012 targets.
The 8-9 December meeting of trade ministers will be an important opportunity to address cross-cutting trade-related climate issues. The meeting of finance ministers on 10-11 December will focus attention on options for redirecting and scaling up global investment in low-carbon technologies. The EU is committed to doing more to mobilise the necessary finance, including through the expansion of the global carbon market and instruments such as the Global Energy Efficiency and Renewable Energy Fund (GEEREF).
The Commission will also be promoting its initiative to build a Global Climate Change Alliance with the poorest developing countries, who will be the most affected by climate change but have the least capacity to cope with it (see IP/07/1352).
Background
The Bali meeting comprises the13th conference of Parties (COP-13) to the UNFCCC and the 3rd Meeting of Parties (COP/MOP-3) to its Kyoto Protocol.
For the high-level segment the EU will be led by the 'Troika' comprising Portuguese Environment Minister Francisco Nunes Correia, Slovenian Environment Minister Janez Podobnik and Commissioner Dimas.
For more information:
http://ec.europa.eu/environment/climat/home_en.htm
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Climate change: EU on track towards Kyoto target but efforts must be maintained, projections show, 28 November 2007
BRUSSEL (EU) - The EU is moving closer to achieving its Kyoto Protocol targets for reducing emissions of greenhouse gases but additional initiatives need to be adopted and implemented swiftly to ensure success. This is the conclusion of the Commission's annual report on progress towards meeting the Kyoto objectives. The latest projections from Member States indicate that measures already taken, together with the purchase of emission credits from third countries and forestry activities that absorb carbon from the atmosphere, will cut EU-15 emissions in 2010 to 7.4% below levels in the chosen base year (1990 in most cases) - just short of the 8% reduction target for 2012. Additional policies and measures under discussion at EU and national levels will allow the target to be reached and even take the reduction to 11.4% if implemented promptly and fully.
Environment Commissioner Stavros Dimas said: “The latest projections show that the Kyoto target will be reached once the Member States have adopted and implemented the additional actions now under discussion. I therefore urge them to do this swiftly. The Commission has already made a significant contribution to reaching the Kyoto target through its decisions on national allocations under the EU Emissions Trading System (ETS) for 2008-2012. This also lays a solid foundation for achieving our more ambitious emission targets for 2020, for which we will bring forward a number of proposals early next year."
Kyoto commitments
Under Kyoto the EU-15 Member States are committed to reducing their collective greenhouse gas emissions in 2008-2012 to 8% below base year levels. There is no collective target for EU-25 or EU-27 emissions. Most EU-12 Member States have individual commitments to reduce emissions to 6% or 8% below base year levels over the same period. Cyprus and Malta have no target.
Historical emissions and projections to 2010
As announced in June (see IP/07/835), EU-15 greenhouse gas emissions in 2005 - the latest year for which full data are available – were 2% lower than base year levels. This contrasted with economic growth of more than 35% over the same period. For the EU-25 the emissions reduction to 2005 was 11% from base year levels.
The latest projections by Member States show that existing policies and measures – those already implemented – are expected to reduce EU-15 emissions to 4% below base year levels by 2010, the middle year of the 2008-2012 period.
Plans by 10 of the EU-15 Member States to buy credits from emission-saving projects carried out in third countries under Kyoto’s market-based mechanisms would bring a further reduction of 2.5%, taking the cut to 6.5%.
Planned afforestation and reforestation activities, which create biological 'sinks' that absorb carbon dioxide from the atmosphere, would contribute an additional cut of 0.9%, giving a 7.4% reduction, 0.6% short of the Kyoto target. The target will be more than comfortably achieved on condition that additional policies and measures currently under discussion are promptly put in place and fully implemented. The total emissions reduction could then increase to 11.4%.
Additional policies and measures under discussion at EU level which would contribute to meeting the Kyoto target include the Commission's proposals to include aviation in the EU ETS from 2011 and to require a 10% cut in greenhouse gas emissions from transport fuels between 2011 and 2020. Both are presently under discussion within the Council and the European Parliament under the co-decision procedure.
A significant contribution to meeting the EU-15's 8% reduction target will come from the Commission's decisions to cut back many national allocation plans (NAP) for the second trading period of the EU ETS. Compared with base year levels, these decisions will reduce EU-15 emissions by 3.4% and EU-25 emissions by 2.6% (emissions data for Bulgaria and Romania have not been independently verified due to their recent accession). Part of this reduction may already be reflected in some Member States' projections.
The progress report indicates that all EU-25 Member States can reach their individual Kyoto targets. Those that are currently not on track have recently identified or are in the process of identifying supplementary actions. To be effective and timely in reducing emissions, such measures must be introduced and implemented swiftly however.
Emissions targets for 2020
At their spring European Council last March, EU Heads of State and Government pledged that the EU would reduce its emissions in the order of 30% below 1990 levels by 2020 provided that other developed countries agreed to make similar efforts. The EU leaders committed the EU to cutting its emissions by at least 20% over the same period in any case, and endorsed the package of climate and energy measures put forward by the Commission last January as the basis for achieving this goal.
The latest projections show that to reach these targets for 2020, the EU will have to put emissions on a much steeper reduction path after 2012. This underlines the need for the EU and Member States to put in place the policies and measures set out in the climate and energy package as soon as possible. The Commission intends to propose a number of key measures in early 2008.
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EU industry warns about carbon trading and renewables, 28.11.2007
The industry lobby group BusinessEurope has warned that the EU must focus more on energy efficiency, rather than renewable energies and emissions trading, if it wants to prevent energy-intensive industries such as chemicals and steel-making from taking their operations elsewhere.
A revised and strengthened EU Emissions Trading Scheme (EU ETS) will cost some companies their "yearly net earnings or more", BusinessEurope's President Ernest-Antoine Seillière told journalists in Brussels on Monday.
Seillière expressed industry concern that a shift in the EU ETS towards full auctioning of emission permits is "so problematic" that increasing costs could force companies to move outside the EU to countries where CO2 emissions are cheaper.
Full auctioning, an idea currently being discussed within the Commission, would signal a significant modification of the current system, under which member-state authorities allocate a percentage of permits to industry free of charge. During the last trading period (2005-2007), over-allocation of permits contributed to a crash in the carbon price.
The Commission is expected to put forward its proposals on a revised EU ETS for the post-2012 trading period on January 23, along with a package of proposals on renewable energies and a communication on carbon capture and storage (CCS).
BusinessEurope argues the EU executive should focus more on realising the full potential of energy efficiency improvements rather than tightening the bloc's carbon market or pushing for "difficult to achieve" renewable energy targets.
A change in depreciation and public procurement rules, more public information campaigns, 'positive incentives' and mandatory eco-efficiency requirements should be part of EU efforts to increase energy efficiency improvements in buildings and industrial processes, according to Folker Franz, BusinessEurope's senior advisor for Environmental Affairs.
In response to a reporter's question about whether the renewables industry had been consulted during the formulation of the group's position, Seillière explained that BusinessEurope is not against renewable energies as such, but expressed severe doubts about the feasibility of reaching a 20% share of renewable energy use in the EU by 2020, a position the group has expressed previously.
The EU's renewable energy industry, however, has argued that the 20% target is more than feasible given the right incentive structures.
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IEA commends Switzerland for its energy policy reforms, but sees more room for higher energy efficiency and use of renewable energy, 27 November 2007
Bern (IEA) - “Switzerland has made impressive progress in its energy policy over the past few years”, said Nobuo Tanaka, Executive Director of the International Energy Agency (IEA), today in Berne at the launch of Energy Policies of IEA Countries – Switzerland 2007 Review.
“Electricity market reform is an important step for Switzerland and its neighbours. Furthermore, Switzerland is making laudable progress on nuclear waste management, and it continues to show leadership in its long-term policy to shift freight transport from road to rail.” But there is still more to do. ”Improving electricity supply and further reducing CO2 emissions in the future remain key challenges”, Mr. Tanaka said.
Switzerland foresees an electricity supply gap starting to widen in the late 2010s and early 2020s. Renewable energy and energy efficiency are projected to cover only part of this gap. As the government wishes to avoid dependence on electricity imports, Switzerland is left with the option to build more nuclear and/or gas-fired capacity. Both face uncertainties.
The process to build new nuclear power plants is long (about 16 to 18 years in Switzerland) and new construction might face a referendum. “The government has plans to streamline the licensing procedure, which is good”, Mr. Tanaka said. “As all decisions should be based on facts, we think the government should continue to inform the citizens on the various aspects of nuclear power.”
Constructing gas-fired power plants is challenged by the current CO2 regime. Mr. Tanaka pointed out that “Switzerland has allocated its quota of cheap emissions reductions from the Kyoto mechanisms unevenly across sectors, strongly favouring the use of transport fuels at the expense of electricity generation and industry”. This renders gas-fired power generation projects uneconomic. “These distortions should be removed”, Mr. Tanaka stressed and called for more favourable conditions for investment but also improved efficiency of electricity use.
Switzerland seems to be on track to meeting its target for reducing greenhouse gases under the Kyoto Protocol. “Kyoto, however, is just the first step and must be followed by a more ambitious international agreement. The real challenge is yet to come and lies in the post-Kyoto period“, observed Mr. Tanaka.
Switzerland is more dependent on oil than most industrialized countries. Oil is also the source for some 77% of Switzerland´s CO2 emissions. Oil use must be tackled to reduce emissions. Efforts should be focused on transport and space heating, the biggest users.
The government´s policy to promote switching to alternative heating systems is to be commended, but low taxes continue to make oil heating in Switzerland very cheap by international comparison. More alarmingly, the trend for emissions from private cars and light-duty vehicles is unsustainable and the voluntary system in place, the Climate Cent, does not provide sufficient incentives for change. “Switzerland should act now and adopt measures to promote low-emission vehicles and more efficient use of oil”, Mr. Tanaka said. Many such measures were suggested in DETEC’s (Department of Environment, Transport, Energy and Communications) draft action plan on energy efficiency.
“We think that whatever electricity supply option Switzerland chooses, and whatever measures to reduce CO2 emissions the country applies, a stronger focus on energy efficiency should always be part of the process. And more can be done to increase the use of renewable energy”, said Mr. Tanaka. “We are telling all countries that they can, and they should, aim much higher.”
The draft action plans on energy efficiency and renewable energy (published in September 2007) provide a solid basis for promoting their further development. Commendably, the draft plan on energy efficiency is broadly in line with the IEA´s recommendations to the G8, which were endorsed by the IEA Energy Ministers in May 2007.
Renewable energy should be promoted as well, not only in electricity generation, but also in space heating. Large-scale use of renewable energy in the transport sector should be based on life-cycle analysis of its costs and benefits.
Switzerland’s world-class energy R&D is focused on more than halving energy needs per capita by the second half of this century. “This ambitious goal needs to be supported by consistent policies on energy efficiency and climate change”, Mr. Tanaka concluded."
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WMO greenhouse gas bulletin 2006: atmospheric carbon dioxide levels highest on record, 26 November 2007
GENEVA (WMO) – In 2006, globally averaged concentrations of carbon dioxide (CO2) in the atmosphere reached their highest levels ever recorded. The World Meteorological Organization’s (WMO) 2006 Greenhouse Gas Bulletin, published today, says it reached 381.2 parts per million (ppm), up 0.53 per cent from 379.2 ppm in 2005.
The information is based on observations from the WMO Global CO2 and CH4 Monitoring Network, a comprehensive climate network recognized by the United Nations Framework Convention on Climate Change.
The latest Bulletin precedes the 50th Anniversary of the Global Carbon Dioxide Record Symposium and Celebration (Kona, Hawai, 28-30 November 2007), co-sponsored by WMO, and WMO’s participation in the 13th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (Bali, Indonesia, 3-14 December 2007).
After water vapour, carbon dioxide, methane (CH4) and nitrous oxide (N2O) are the three most prevalent greenhouse gases in the Earth’s atmosphere respectively. Greenhouse gases are major drivers of global warming and climate change. Concentrations of N2O also reached record highs in 2006, up 0.25 per cent from 319.2 parts per billion (ppb) to 320.1 ppb while methane remained almost unchanged at 1782 ppb.
The 36 per cent rise in CO2 since the late 1700s has largely been generated by emissions from the combustion of fossil fuels. Around one third of N2O discharged into the air is a result of human activities such as fuel combustion, biomass burning, fertilizer use and some industrial processes. Human activity such as fossil fuel exploitation, rice agriculture, biomass burning, landfills and ruminant farm animals account for some 60 per cent of atmospheric CH4, with natural processes including those produced by wetlands and termites responsible for the remaining 40 per cent.
Accurate atmospheric observations made globally by some 44 WMO Members are archived and distributed by the World Data Centre for Greenhouse Gases (WDCGG), located at the Japan Meteorological Agency.
WMO prepares the Greenhouse Gases Bulletin in cooperation with WDCGG and the Global Atmosphere Watch Scientific Advisory Group for Greenhouse Gases with the assistance of the National Oceanic and Atmospheric Administration’s Earth System Research Laboratory (NOAA-ESRL).
A remarkable development in 2007 was the launch by the United States’ National Oceanic and Atmospheric Administration (NOAA) of CarbonTracker, a global carbon cycle modelling tool that converts surface-based global greenhouse gas observations into best estimates of global distribution in the atmosphere and the net air-surface exchange of carbon dioxide.
For the full Bulletin: http://www.wmo.int/pages/prog/arep/gaw/ghg/ghgbull06_en.html
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Electricity in Europe, Evolution of supply-demand balances by 2020, 27 November 2007
In 2006, the European power stations had a total capacity of 763.5 GW. Half of them were thermal power stations (53%) and most were located in the new Member States.
Electricity capacity should grow by 2% per year to 844.8 GW in 2010, with very large investments in nonhydraulic renewable energies (+55 GW between 2005 and 2010 or +15.7% per year) and natural gas power stations (+54.6 GW or +6.6% per year). As a result, investments in the other energy sources will decrease with oil down -1.5%, nuclear power -0.9% and coal -1%. This sharp rise in production capacities comes in response to stronger demand. The focus on low-CO2-emitting energy sources is also coherent with measures adopted by the EU to meet the requirements of the Kyoto Protocol on greenhouse gas emissions.
It is harder to make precise country forecasts for the longer term (i.e. by 2020). However, two scenarios are most likely. The first one features slower demand growth over the 2010-2020 period than pre-2010. In that case, natural gas and renewable energies will develop to the detriment of nuclear power, coal and oil but at a slower pace (respectively, 2.6% and 5.4% per year). The second one assumes stronger demand (especially in eastern Europe), which would be offset by larger investments in natural gas (+6.6% annual growth rate over the 2010-2020 period). In both cases, the production trends for each energy source will depend heavily on CO2 emissions.
Electricity exchanges between European countries are likely to change considerably in the coming years. For instance, France, which is already a major supplier in Europe, should increase its nuclear power exports towards its neighbours (except Germany who is also an exporter) and the United Kingdom (which will make investments over the period under review to become self-sufficient). Meanwhile, eastern European countries, which are mainly exporters nowadays, thanks to residual overcapacities, should cut their investments and gradually absorb their surpluses and this trend will materialise under both scenarios.
Not surprisingly, higher electricity production will mean higher greenhouse gas emissions. These will rise by 73 Mt between 2010 and 2020 for a demand growth that remains on trend (first scenario) and 170 Mt if demand is strong (second scenario). The share of renewable energies in electricity production (excluding nuclear power) will remain low, reaching 20% to 22% in 2020 depending on the scenarios. Fossil fuels will continue to dominate (with 55% to 58% of the production in 2020). CO2 emissions will increase more slowly than electricity production. If growth remains on trend, CO2 emissions will rise by only 5% for a 9% increase in electricity production between 2010 and 2020 against, respectively, 11% and 16% using the strong growth scenario. Because of the EU's 20% emission reduction target by 2020, we see growing divergence between economic growth, energy demand and CO2 emissions, but this will not be enough to reduce the electricity sector's emissions.
Renewable energies should continue to develop strongly but at a slower pace than prior to 2010 (except hydraulic capacities which are already saturated). Given that wind power will be left with little potential, capacities will grow at a slower pace from 2010. In 2020, the market share of renewable energies will be 38% of total capacities (19% for hydropower and 19% for other energies) against 29% in 2006. However, renewable energy-based electricity production will be lower as those power stations are often less available than thermal stations. This is true of wind turbines, for example. Therefore, the EC's 20% target for renewable energy-based electricity excluding hydro might not be fully reached in 2020, despite the efforts of some countries (mostly Germany and Scandinavia).
In Europe, 27% of total power stations should be gas plants in 2020. Their strong growth (3.9% per year in 2005-2020) can be explained by several factors: the high efficiency of the new power stations, a nuclear phase-out in several European countries requiring a replacement by power stations of large unit capacity, a better environmental impact than the other fossil fuels with proven technology. The decommissioning of the existing nuclear plants in several European countries (Germany plans to reduce its capacity by 11.7 GW in 2010-2020) should continue at an average pace of -0.8% per year. If the German nuclear phase-out plan (still under discussion) is eventually abandoned, Germany could maintain some nuclear plants, to the detriment of gas power stations.
Renewable energies will see their share grow (both in percentage and absolute terms) although fossil fuels will still account for over 55% of the electricity production in 2020 (58% based on our main scenario). The share of renewables (excluding nuclear power) will remain small, reaching slightly more than 17% in 2010 (653 TWh out of 3,698 TWh), and 20%-22% in 2020 according to scenarios. This is mainly because they remain more expensive than traditional energy sources, making their market penetration difficult beyond mandates. Finally, the substitution of high CO2-emitting fuels (oil or coal) with other lower CO2-emitting fuels (natural gas) will enable emissions to be reduced despite higher electricity production. By 2020, gas (25%-32% of the total production) will be responsible for 29% to 35% of the emissions. By contrast coal, source of 16%-17% of generation, will be responsible for 39%-41% of emissions.
Due to higher electricity production, European CO2 emissions will increase by around 73 Mt between 2010 and 2020 (based on the trend growth scenario) or 170 Mt (based on the strong growth scenario). However, even if the share of renewable energies remains low and electricity is produced to a greater extent with low rather than high CO2-emitting fuels, total emissions will increase more slowly than electricity production. For instance, based on the trend growth scenario, emissions would only rise by 5% if production increased by around 9% between 2010 and 2020. With respect to the EU's 20% emission reduction target by 2020, we see growing divergence between economic growth, energy demand and CO2 emissions, but this alone will not be enough to reduce the electricity sector's emissions.
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Emissions Trading: allegations of double counting are incorrect, 26 November 2007
EU - The Commission has verified and can confirm that the number of allowances put out of circulation (retired) in 2005 and 2006 corresponds to the number of verified emissions reported by companies in 2005 and 2006.
Companies must surrender allowances equivalent to their actual emissions each year to the government. Governments then in turn must retire units to the UNFCCC for the country's overall emissions, but this retirement can involve not only allowances, but also certified emissions reduction units, emission reduction units, etc. Therefore, the country is not required to retire the very same allowances that were surrendered by companies, but only an amount equivalent thereto.
As a result of this flexibility, it is possible that in several cases Member States allocate several times over in the same year or take allowances out of circulation that have never been given to companies but were reserved for new entrants. This way of "accounting" is in line with the relevant legislation (Commission Regulation No 2216/2004 of 21/12/2004 for a standardized and secured system of registries pursuant to Directive 2003/87/EC of the EP and Council and Decision No 280/2004/EC of the EP and the Council).
Any allegation that there would have been double counting is pertinently incorrect.
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Towards a low carbon future: European Strategic Energy Technology Plan, 22 November 2007
EU - The European Commission will present the European Strategic Energy Technology Plan (SET-Plan) (see IP/07/1750). Low carbon technologies will play a vital role in reaching our energy and climate change targets. The main goal of the SET-Plan is to accelerate the development and implementation of these technologies. This background note sets out the details of the SET Plan. Its rationale accompanied by some useful background figures and charts is set out in MEMO/07/494. Technology is vital for reaching energy and climate change objectives
The inter-related challenges of climate change, security of energy supply and competitiveness are multifaceted and require a coordinated response. We are piecing together a far-reaching jigsaw of policies and measures: binding targets for 2020 to reduce greenhouse gas emissions by 20% and ensure 20% of renewable energy sources in the EU energy mix; a plan to reduce EU global primary energy use by 20% by 2020; carbon pricing through the Emissions Trading Scheme and energy taxation; a competitive Internal Energy Market; an international energy policy.
Technology is vital in reaching all the above-mentioned objectives. We need a dedicated policy to accelerate the development and deployment of cost-effective low carbon technologies. To meet the 2020 targets, we need to lower the cost of clean energy and put EU industry at the forefront of the rapidly growing low carbon technology sector. In the longer term, if we are to meet the greater ambition of reducing our greenhouse gas emissions by 60-80% by 2050, new generations of technologies have to be developed through breakthrough in research.
The transition to a low carbon economy will take decades and touch every sector of the economy, but we cannot afford to delay action. Decisions taken over the next 10-15 years will have profound consequences for energy security, for climate change, for growth and jobs in Europe.
Weaknesses in energy innovation today
Since the oil price shocks in the 70s and 80s, Europe has enjoyed inexpensive and plentiful energy supplies. The easy availability of resources, no carbon constraints and the commercial imperatives of market forces have not only left us dependent on fossil fuels, but have also tempered the interest for innovation and investment in new energy technologies. In short, there is neither a natural market appetite nor a short-term business benefit for such technologies. This market gap between supply and demand is often referred to as the 'valley of death' for low carbon energy technologies. Public intervention to s | 
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