05 Oct 2020, 12:45

What a higher EU 2030 climate target means for member states like Germany

The European Commission under president Ursula von der Leyen has proposed to increase the bloc’s 2030 greenhouse gas emissions reduction target to "at least 55 percent". The European Parliament’s environment committee has endorsed an even higher target (60% reduction) and the full plenary will vote in October. German chancellor Angela Merkel on 30 September endorsed the Commission proposal. Germany, which currently holds the presidency of the EU Council, aims to bring EU member states to agree on 55 percent. Depending on the eventual target and how the EU chooses to reach it, the impact on member states will vary widely. While German industry warns that raising it according to von der Leyen’s proposal would pose a great challenge, environmental organisations are calling for a higher target to meet the Paris climate agreement goals. Experts say that the Commission proposal would very likely require the bloc to phase out coal almost entirely by 2030. [Update adds info on what proposed target could have on coal exit in EU countries]

On 4 March 2020, the European Commission proposed the European Climate Law, which would make the goal of the bloc’s climate neutrality by 2050 legally binding. Another element of the law – for now left blank – will be a more ambitious greenhouse gas reduction target by the year 2030 for the Union as a whole. This would be Europe’s contribution to global efforts to meet the goals of the 2015 Paris Climate Agreement

Commission president Ursula von der Leyen last year proposed a new target of 50 to 55 percent and specified this towards the high end of this range in her first State of the Union speech on 16 September 2020. Details on how to get emissions down to that target were presented a day later.

Then, member states and the European Parliament will have their say and in the end all three institutions will have to agree on a new target. The environment committee of the European Parliament has come out in favour of a 60 percent reduction and a full plenary vote is scheduled for October.

While the EU is on track to overshoot its current target of reducing emissions by 40 percent, raising it to "at least 55 percent" would require significant additional efforts by the member states. Talks on the exact target which the German Council presidency aims to facilitate could become quite a challenge. Certain eastern European countries, which rely on traditional polluting industries and face a hard time dealing with the economic and social transition necessary in order to become climate neutral, have been especially sceptical. The environment ministers of Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia had called on the Commission to present a “realistic” assessment of the impact of a higher target.

Other member states, such as the Nordic countries, are among those pushing for more ambition. Finland said it is actively promoting to raise the target to “at least 55 percent”, as did Denmark and Sweden, which added that it should be in line with the Paris Agreement 1.5° goal.

How exactly the EU chooses to reach the new goal – which instruments and measures it employs – will ultimately determine how much each country has to ratchet up its national ambitions. Tough negotiations are ahead not only to agree the target by the end of this year, but to implement the complete overhaul of EU energy and climate legislation in the months or even years that follow.

Photo shows Merkel, Michel and Rutte in the European Council. Source: European Union 2020.
Germany aims to finalise talks on raising the EU target among member states during its Council presidency by the end of the year. Photo: European Union 2020.

German government supports higher targets, but calls for fair distribution of efforts

Chancellor Angela Merkel said her government would "fight" to ensure that member states agreed on the Commission proposal. "Our goal is to have a uniform decision by all member states of the European Union by the end of the German presidency that we agree on this 55 percent reduction target for the European Union in 2030," she told parliament on 30 September 2020.

Germany has long made finding an agreement on this among member states one of the key climate policy objectives of its EU Council presidency in the second half of 2020. However, the government had emphasised its role as a mediator and honest broker during these six months.

For some time, Merkel opposed calls for a more ambitious EU climate target. In 2018, she said “We should first reach the goals we have already set. I don’t think that constantly setting new targets makes sense.” However, as concerns about heat waves and the Fridays for Future movement dramatically shifted public opinion in favour of more climate action, Merkel changed course. In August 2019, she said she could “very well support” a Dutch suggestion to cut greenhouse gas emissions by 55 percent compared to 1990 levels. Later, Merkel officially backed the European Commission proposal of 50-55 percent, without further specifying whether she was in favour of the range’s higher end. She warned that all member states would need to do more. “The rest remains for the negotiations; I will not use my trump cards too early,” she told the German parliament in December 2019. She later reiterated her support at the Petersberg Climate Dialogue in 2020, when the coronavirus pandemic was already in full swing.

Environment minister Svenja Schulze from Merkel’s coalition partner the Social Democrats (SPD) and also conservative economy minister Altmaier came out generally in favour of reducing emissions by 55 percent. However, other members of the chancellor’s conservative parliamentary CDU/CSU group have criticised Merkel’s blanket support, questioning whether it was the right move in view of the coronavirus crisis. Wolfgang Steiger, head of the party-affiliated CDU Economic Council, called both the expected move and potentially tighter emissions limits for cars "political insensitivity," arguing that "additional burdens" through tougher climate regulation would compound the current economic crisis many companies are facing. The CDU/CSU group as a whole has not come out in favour or against, but said that other countries would have to contribute to reaching a higher target with efforts comparable to those of Germany.

The Green Party, which in light of its strong showing in the polls has a fair chance to become part of Germany’s coalition government next year, has called on the government to advocate for a 65 percent reduction during its Council presidency.

Industry considers tighter targets a challenge

The Association of German Chambers of Commerce and Industry (DIHK) has warned that a tightening of the EU's 2030 climate target would come coupled with far-reaching consequences for Germany's industry. According to the chambers, it remains to be seen whether a tightening "will bring more opportunities than risks," which would depend on "a multitude of factors." In a nine-page analysis, it warned of possible higher power prices when allowance prices in the ETS rise as a result of a higher target, as well as of a “probable” increase in prices after 2026 in the forthcoming national German CO₂ price system for transport and heating fuels. The DIHK called for “effective protection” from carbon leakage risks, but also stressed that German companies are often leaders in environmentally-friendly technologies, which is why tighter environmental regulation could ultimately lead to higher demand for their products and services.

The German business daily Handelsblatt reported that German industry representatives in Brussels had criticised the European Commission for leaning towards the more ambitious target. "Europe marches on lonely in this world," an unnamed industry representative was quoted by the newspaper as commenting.

The association of energy intensive businesses (VIK) was one of several stakeholders that cited the European Commission’s public consultation on the 2030 climate target plan to voice concerns about carbon leakage and affordable energy. The VIK called for EU financial support to set up a market for low-emission technologies. Chemicals company BASF said that it expected the Commission’s impact assessment to provide more clarity on cost-efficient and sound burden-sharing between ETS and non-ETS, the availability and costs of renewable energy for industry and options for the requisite increased carbon leakage protection.

Photo shows steamcracker in Ludwigshafen. Source: BASF SE.
Industry facilities such as German chemical company BASF's steamcracker in Ludwigshafen will be affected by higher climate targets, as they have depended on fossil fuels. Photo: BASF SE.

NGOs want more ambitious target

German NGOs have welcomed the debate about higher targets and generally called for more ambition than shown in the European Commission proposal. Reacting to the draft climate law presented by the European Commission, several organisations have jointly called for an at least 65 percent emissions reduction by 2030, as was also proposed in the European Parliament’s draft report by Swedish MEP Jytte Guteland. When the EP’s environment committee voted to endorse a 60 percent reduction on 10 September, Kai Niebert, president of the umbrella organisation of German environmental NGOs (DNR), said: “The environment committee's vote is good news for the strengthening of the European Green Deal and for the future of the Paris Climate Agreement. It brings us closer to the EU-wide reduction target of at least 65 percent that is required by climate science.”

Germanwatch published a separate position paper in which it called for an agreement this year on “55 percent and if possible a more ambitious target.” However, the organisation also said this was not enough to be in line with Paris Agreement goals, and called on the Commission to prepare an impact assessment for emissions reductions of 65 percent and more.

Germany will have to ratchet up ambitions – others as well

An evaluation of what a higher EU target would mean for Germany depends on the target itself, the choice of instruments and the detailed measures that would be negotiated over the next months and even years. Germany will almost certainly have to increase its efforts, as the other member states are unlikely to agree to a higher target if Europe’s largest economy does not also do its part. If the country wants to live up to what is often still perceived as a pioneer role, it will have to ratchet up its national greenhouse gas reduction target (currently at about -57% by 2030) – shortly after having just agreed a major climate action package.

Germany had been off track towards reaching its own climate targets for some time when Merkel’s government coalition in 2019 debated its comprehensive Climate Action Programme 2030, meant to ensure that the goals would be met a decade later. At the time already, researchers and NGOs warned that the government was working on a programme for a target that would soon be outdated – a higher EU target would “certainly entail tighter requirements for Germany,” said Oliver Geden of the German Institute for International and Security Affairs (SWP).

Two reports published in March 2020 (here and here) showed that the programme of measures Merkel’s grand coalition had agreed in the end would not be enough to even reach the current 2030 climate target as planned. That means Germany will have to again increase its efforts and the government will have to come up with a new plan. This task will likely fall on whoever leads the country after next year’s election.

France has a similar issue. While, like Germany, the country’s 2020 emissions performance will benefit from the coronavirus pandemic’s effects, its climate efforts have been mediocre, wrote Valéry Laramée de Tannenberg in a recent article in Journale de l’environnement. The country’s High Council for the Climate (Haut conseil pour le climat – HCC) warned annual emissions reduction is far off target. Laramée de Tannenberg writes that France’s current 2030 targets are naturally based on current EU targets, but the French government has to take into account EU plans to increase the bloc’s goal.  

EU climate target of -55% would mean near-exit from coal in 2030 – experts

Stepping up the 2030 EU climate target to an emission reduction of at least 55 percent as proposed by the European Commission would very likely require the bloc to phase out coal almost entirely by that date, according to experts. The move, which is backed by current EU Council presidency Germany, would also have far-reaching consequences for Germany's coal exit plans, the experts told Clean Energy Wire. The country would have to effectively bring forward its phaseout of the climate-damaging fossil fuel, currently scheduled for 2038 at the latest.

In its proposal, the European Commission said that buildings and the electricity sector can make the largest and most cost-efficient contribution to reaching a 55 percent emissions cut.

Emissions from power plants are governed by the EU Emissions Trading System (ETS), which the Commission intends to strengthen significantly. This would cause prices for allowances to rise, making the most emissions-intensive fuel – coal – increasingly uncompetitive, as the Commission expects the renewables share in EU electricity production to at least double from today’s levels of 32 percent to around 65 percent or more.

In an analysis of the EU's Impact Assessment on raising the EU 2030 climate target, Belgian consultancy Climact and think tank Ecologic estimate that coal will only represent around two percent of the EU's power mix in 2030 in different scenarios.

What exactly could it mean for Germany?

While it is still unclear which instruments for further emissions reduction the European Union will ultimately choose, researchers from the Institute for Applied Ecology (Öko-Institut) and the Agora Energiewende have published a study looking at possible pathways. They said that technically feasible emissions reductions compatible with the 55 percent target (relative to 1990) for the EU as a whole range from 45 to 49 percent (current goal 30%) for the non-ETS sectors and from 59 to 63 percent (now 43%) for the ETS sectors (both relative to 2005).

For Germany, this would mean additional efforts through the EU-wide ETS on the one hand. In the non-ETS sectors, such as transport and heating, the researchers assume the German target would have to be increased from the current 38 percent to more than 50 percent. The researchers also point out that measures, such as more ambitious CO₂ emissions standards for cars and vans, would have a particularly high impact on the country’s transport emissions reduction.

Another team of researchers, including Michael Pahle, head of the climate and energy working group at the Potsdam Institute for Climate Impact Research (PIK), wrote a short study about what different ways of increasing targets in the ETS and non-ETS sectors could mean for Germany. They showed that without renegotiating the different member states’ contributions in the non-ETS sectors, Germany would have to significantly increase its efforts there and be prepared for a much higher allowance price in the ETS. They also showed that should the EU decide to only adapt targets in the ETS, the burden on industry would be much greater, as its emissions are largely governed by that system. The researchers called for an open and early debate about the choice of instruments.

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