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European Union to Cut Greenhouse Gas Emissions by Twenty Percent by 2020: European Commission Issues Climate Change Policy Package

by Laura L. Hart

The European Commission recently released a preliminary package of broad climate change policies that would affect industry, energy generation and transportation in the European Union. The goals of the climate change policies are to: (1) to reduce greenhouse gas emissions by twenty percent (20%) below 1990 levels by the year 2020; (2) to increase the proportion of power generated by renewable resources to twenty percent (20%) of total energy consumption; and (3) to institute a mandate that ten percent (10%) of the fuel consumed by the European vehicles to be from biofuel sources.            

The proposed measures include:

• an improved emissions trading system to cover all major industrial emitters, such as power plants, and to include more greenhouse gases such as nitrous oxide and perfluorocarbons;

• an improved emissions trading system that allows firms in one European Union country to buy allowances in any other country;

• an emission reduction target for sectors not covered by the emissions trading system, including transportation, buildings, agriculture, and garbage, so that all sectors and individuals in the European Union are contributing;

• legally binding targets for each European Union country that increases the share of renewable energy sources in the overall energy mix; and

• new rules for carbon capture and underground storage and certain environmental subsidies to encourage investment in those endeavors.

In order to meet the goal of decreasing greenhouse gas emissions by twenty percent (20%), the Emissions Trading System will be changed to require power generators that currently receive their carbon credits for free to purchase at least two-thirds (2/3) of them at auctions beginning in 2013 and to purchase all of the credits by 2020. The European Commission wanted to extend the same requirement to all of Europe’s high-polluting industries, but the recently-released policies exempted those “sectors vulnerable to international competition” from having to purchase credits. Those industries excepted include steelmaking, aluminum, and concrete. Industries that are not required by the recent policies to comply with the Emissions Trading System would have to reduce their emissions by ten percent (10%). 

The package of proposed legislation sets forth quotas for each country’s required reduction of greenhouse gas emissions and for each country’s use of renewable energy sources. However, the proportion of reduction in greenhouse gas emissions and the use of renewable energy sources by each country are not equal. 

The package of climate change policies must be adopted by the European Parliament and a majority of the twenty-seven (27) European Union governments, a process that could take until 2009. In addition, the President of the European Commission estimated that the cost to implement the climate change policies would be about $87.4 billion per year, though there is argument that the cost could be twice that.

For more information, see the European Union’s website here.

Full post as published by Louisiana Law Blog on February 04, 2008 (boomark / email).