EU Climate agreement gets mixed reception in Germany

The EU’s 2030 Climate and Energy Framework agreed in Brussels last night has left some wanting more progressive targets on energy efficiency and the development of renewables, while others decried what they see as a tightening of targets that will hurt Europe’s competitiveness.

Christian Hey of the German Advisory Council on the Environment said that the “biggest disappointment” was a Europe-wide 27 per cent target on energy efficiency: a compromise between states that backed Germany’s call for 30 per cent, and those including the UK that wanted the target still lower at 25 per cent.

“This represents a further weakening of the efficiency target,” Hey told the Clean Energy Wire, “which is short-sighted because energy efficiency is the cheapest way to energy independence. It’s difficult to understand their rationale not to use the available potential – which is much more than the 30 per cent that was under discussion.”

Mario Ragwitz who works on energy policy at research institute Fraunhofer ISI said that higher targets on energy efficiency and renewables – also agreed at 27 per cent – would have meant a more affordable route for European consumers to achieving the 40 per cent emissions target.

“Economically, energy savings of 30 per cent would lead to an average cost saving of 21 billion euros per year from 2020 to 2030, so one can conclude that by not agreeing to more ambitious targets, an opportunity for savings on total system costs has been lost.”

Renewables subsidies given the green light

Ragwitz told the Clean Energy Wire there had also been a missed opportunity for greater investment in renewables.

“For the long-term de-carbonisation of the energy system we know we have to go towards a very high share of renewables in the electricity system… The key element here for renewable energy and energy efficiency is that they are capital-intensive technologies and therefore more binding and more ambitious targets mean higher certainty and lower risk for investment.”

Still, Federal Minister for Economic Affairs and Energy Sigmar Gabriel said he welcomed the go-ahead for member states to follow their own targets on renewables, giving the green light to Germany’s renewable energy law which had come under scrutiny for subsidising the development of green energy production.

“It is…clear we can go ahead with switching to renewable energies faster in Germany,” Gabriel said. “ This is an important foundation for a future framework in Europe that also supports the German Energiewende.”

Questions remain over ETS reform

In order to bring some coal-dependent countries on board with the 40 per target on emissions, which is central to the agreed framework, EU leaders agreed to finance the development of energy infrastructure in low-income countries including Poland with funds from carbon allowances auctioned under the emissions trading scheme.

An increased share of allowances will also be allocated to industry and the energy sector in these countries, including in the period after 2020 when many had envisaged an end to free allowances.

A lowering of the cap on emissions by 2.2 per cent per year after 2020 – compared to the current 1.74 per cent – was also agreed. But Patrick Graichen, director of Berlin based think-tank Agora Energiewende said that wouldn’t increase the price of carbon over the next five to ten years, meaning Germany will now be debating the possibility of a national carbon pricing scheme.

“This agreement spells the end of any hope that the ETS will help on the issue of coal and gas,” Graichen told the Clean Energy Wire. “There is debate going on at the moment over whether introducing national schemes would be a kiss of death for the EU scheme, or if that scheme is so weak it makes little difference.”

However, the Federal Environment Ministry said on Friday that it was “still committed to ensuring the introduction of a market stability reserve and the back-loading of allowances in 2017” – a proposal put forward by Germany ahead of the summit.

“This is important because carbon emissions need to be priced as quickly as possible to influence investment in the right direction,” the Ministry said.

German industry fears for competitiveness

Meanwhile, German industry had reservations about the deal, with groups including the German Chemical Industry Association (VCI) warning the targets would mean higher energy prices and unfair pressure on European industry.

“We fear that the tighter climate target will adversely affect the European network of industries and, consequently, weaken growth and competitiveness. This will intensify the negative development among investors,” said VCI director Utz Tillmann.

In what some are calling a concession to business concerns, the agreement includes a clause allowing for targets to be revised in line with those set internationally at the UN Climate Conference in December next year. Hey said the uncertainty this implies could have a negative effect on investment.

The German Association of Energy and Water Industries (BDEW) was more positive about the targets.

“The agreed targets of at least 40 per cent fewer CO2 emissions by 2030 is ambitious and an important signal for the international Climate Conference in Paris 2015,” said BDEW director Hildegard Müller. But she added that more was needed to secure investment for the period after 2020.

“Questions left open must be settled as quickly as possible. As a consequence, the negotiations on reform of the European emissions trading scheme must reach a quick and successful conclusion,” Müller said.

Ruby Russell is a freelance contributor to the Clean Energy Wire. She has also written for Deutsche Welle, The Guardian, The Washington Times and The Telegraph, among others. You can contact her in Berlin at newsroom@cleanenergywire.org or +49 30 2844 902-16.