The European Council has endorsed a binding EU target of an at least 40% domestic reduction in greenhouse gas emissions by 2030 compared to 1990.

In a statement, the Council said the target will be delivered collectively by the EU in the most cost-effective manner possible, with the reductions in the ETS and non-ETS sectors amounting to 43% and 30% by 2030 compared to 2005, respectively.

A reformed Emissions Trading System (ETS), together with an instrument to stabilise the market in line with the Commission proposal, will be the main European instrument to achieve the target.  The annual factor to reduce the cap on the maximum permitted emissions will be changed from 1.74% to 2.2% from 2021 onwards.

The use free allocation will not expire – the EC said:

“Existing measures will continue after 2020 to prevent the risk of carbon leakage due to climate policy, as long as no comparable efforts are undertaken in other major economies, with the objective of providing appropriate levels of support for sectors at risk of losing international competitiveness.”

 The benchmarks for free allocations will be periodically reviewed in line with technological progress in the respective industry sectors, taking both direct and indirect carbon costs into account. The statement says:

“In order to maintain international competitiveness, the most efficient installations in these sectors should not face undue carbon costs leading to carbon leakage.”

Member States with a GDP per capita below 60% of the EU average can opt to continue to give free allowances to the energy sector up to 2030. A new reserve of 2% of the EU ETS allowances will also be set aside to address particularly high additional investment needs in low income Member States. The proceeds from the reserve will be used to improve energy efficiency and to modernise the energy systems of these Member States.

On renewables and energy efficiency, the EC has et an EU target of at least 27% for the share of renewable energy consumed in the EU in 2030, which will be binding at EU level.

The statement said that integration of rising levels of intermittent renewable energy requires a more interconnected internal energy market and appropriate back up, which should be coordinated as necessary at regional level.

The target will be reviewed by 2020, with a view to an EU level of 30% in mind. The Commission will also propose priority sectors in which significant energy-efficiency gains can be reaped, and ways to address them at EU level, with the EU and the Member States focusing their regulatory and financial efforts on these sectors.

The European Council has also agreed that a reliable and transparent governance system “without any unnecessary administrative burden” will be developed to help ensure that the EU meets its energy policy goals, with the necessary flexibility for Member States and fully respecting  their freedom to determine their energy mix.

EEF says renewables and energy efficiency targets are a fudge

Responding to the EU leaders’ agreement on the 2030 climate and energy package, Head of Climate and Environment Policy Gareth Stace at EEF, the UK manufacturers and engineering industry organisation said:

“The EU now has an emissions target broadly in line with the UK’s own ambitions, helping level the playing field for UK manufacturers and strengthening the market for low-carbon goods and services.

“EU leaders have signalled that they recognise the importance of protecting carbon-intensive industries threatened by overseas competitors from the full costs of the EU emissions trading system. But, we will be watching closely over the coming months to ensure these fine words translate into real action to improve what is currently a rather problematic protective system.

“However, the EU-wide renewables and energy efficiency targets are a fudge that are unlikely to address the current inefficiencies caused by overlapping sets of goals and incentives.

“It is important when the government is setting its next set of domestic targets for 2032 that it does not push UK manufacturers far beyond what their continental competitors have to do.”