Trends and projections in Europe 2013 – Tracking progress towards Europe`s climate and energy targets until 2020

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Courtesy of European Environment Agency (EEA)

This 2013 edition of the annual EEA 'Trends and projections' report aims to provide an assessment of the progress of the European Union (EU) and European countries towards achieving their climate mitigation and energy policy objectives. These targets include international commitments under the Kyoto Protocol (KP) and the EU's own commitment to reduce its greenhouse gas (GHG) emissions by 20 % during the 2013.2020 period.

The report also broadens its scope to include a new assessment of progress towards energy policy objectives adopted by the EU for 2020, which aim to increase the share of renewable energy sources (RES) to 20 % of the EU's gross final energy consumption and to increase energy efficiency by 20 %. Taken together, these three climate and energy targets for 2020 constitute the 20/20/20 objectives which form part of the 'Europe 2020 . Europe's growth strategy'.

The report supports and complements the annual report of the European Commission to the European Parliament and the Council on the progress of the EU and its Member States towards set targets, as required by Article 21 of the EU Monitoring Mechanism Regulation (MMR) (EU, 2013a).

The first section of the report, Part A, looks at progress towards Europe's objectives under the Kyoto Protocol's first commitment period (2008.2012).

With the recent release by the EEA and 18 EU Member States of approximated estimates of 2012 GHG emissions, complete data on annual GHG emissions during the KP's first commitment period 2008.2012 is available for the first time. These data allow for a more accurate assessment of progress than in previous years as well as a full analysis of the EU Emissions Trading Scheme (ETS) and non.EU ETS sectors for the 2008.2012 period (1).

The Kyoto targets in Europe for 2008.2012

The EU.15 has a common target to be achieved collectively under the 'burden-sharing agreement'. This agreement sets differentiated emission limitation and reduction targets for each EU.15 Member State. Eleven other Member States (all except Cyprus and Malta), Iceland, Liechtenstein, Norway and Switzerland have individual GHG reduction and limitation targets under the KP. Each of these Kyoto targets corresponds to an emission budget (corresponding to a quantity of 'Kyoto units') for the first commitment period (2008.2012) of the KP.

To achieve their Kyoto targets, countries must balance their emissions with the amount of Kyoto units they are holding. Such a balance can be achieved by limiting or reducing their domestic emissions and by increasing their emission budget through the contribution of Land Use, Land-Use Change and Forestry (LULUCF) activities, such as forest management, as well as the use of the KP's flexible mechanisms whereby they can acquire Kyoto units from other countries.

Creation of the EU ETS to achieve Kyoto targets

The EU ETS was introduced to help Member States achieve their Kyoto targets and to achieve cost-efficient emission reductions at the sources of pollution themselves (so-called 'point sources') across the EU. Through the allocation of allowances linked to Kyoto units for the trading period 2008.2012, each national Kyoto target was split into an emission budget for the ETS sectors and another emission budget for the sectors not covered by the ETS. These non.ETS sectors include, inter alia, road transport, buildings, agriculture and waste. Member States were themselves able to set the proportion of the emission budgets allocated to the EU ETS and to the non.EU ETS sectors.

Participants in the EU ETS are legally bound to match their emissions with an equivalent number of allowances. Participants with a deficit of allowances are permitted to purchase from those with a surplus operating within the ETS or make use of, to a limited extent, international credits under the KP. To achieve their Kyoto targets, governments must therefore ensure that emissions in the non.ETS sectors are limited or reduced below their own non.ETS emission budget. They can also make use of international credits under the KP as long as this supplements domestic action.

In the EU.15, the overall EU ETS cap (i.e. the maximum amount of emissions allowed) for the period 2008.2012 was 9 % below 2005 levels while the non.ETS sectors had an emission budget of 4 % below their 2005 levels. In Austria, Denmark, Italy, Luxembourg, Spain and Liechtenstein, non.ETS reduction needs were higher than 15 % compared to 2005 non.ETS emissions levels. For all these countries, the non.ETS emission targets for 2008.2012 were relatively more demanding than in the ETS sectors.

The EU ETS in 2008.2012

The EU ETS covers CO2 emissions from installations in the energy sector as well as most industrial sectors. This includes power stations and other combustion plants, oil refineries, etc. During this second trading period under the EU ETS (coinciding with the first commitment period of the KP), the scheme covered around 11 500 installations in 30 participating countries (27 EU Member States, Iceland, Liechtenstein and Norway). Taken together, these installations emitted around 1.9 billion tonnes CO2 on average per year, which is equivalent to approximately 41 % of EU GHG emissions. CO2 emissions from aviation have been included in the scheme since 2012.

Emissions in the period 2008.2012 were influenced by a number of factors such as changes in the fuel mix (electricity sector), observing a shift to gas, increased use of RES and reduced production due to the economic crisis (industrial sectors). The accelerated use of offset credits between 2008 and 2012 and the effects of the economic crisis (which resulted in lower emissions than initially anticipated) resulted in the accumulation of a large surplus of around 1.8 billion allowances.

EU ETS emissions were reduced below ETS caps in most Member States during the period 2008.2012, while success in achieving emission budgets in the non.ETS sectors appeared more difficult. The crisis had a greater impact on emission trends in the ETS sectors as these sectors are more strongly linked to economic activity. The recession, unforeseen at the time ETS caps were set for the second trading period, drove down emissions in the EU ETS more than in the other sectors.

Current progress towards 2008.2012 Kyoto targets . EU.15 on track

The EU.15 is on track towards its 8 % reduction target, compared to base.year levels under the KP. Total average emissions of the EU.15 in the 2008.2012 period have declined by 12.2 % compared to base.year levels. Overall, the combined performance of all EU.15 Member States is equivalent to an overachievement of approximately 236 Mt CO2.equivalent per year (5.5 % of the EU.15's base.year emissions).

Non.ETS emissions in the EU.15 during the period from 2008 to 2012 were lower than the relevant emission budget by 95 Mt CO2.equivalent per year, which represents an overachievement equivalent to 2.2 % of total EU.15 base.year emissions.

So-called 'carbon sink' activities (such as when carbon is absorbed by forest growth with any net benefit then being accounted for) are expected to contribute towards an additional emission reduction of 64 Mt CO2.equivalent per year (1.5 % of EU.15 base.year emissions), based on data for the period 2008.2011.

The use of flexible mechanisms by nine EU.15 Member States is expected to represent an increase in the overall EU emission budget by 81 Mt CO2.equivalent per year (1.9 % of EU.15 base.year emissions). Eight of these Member States have reported information on allocated financial resources, which represent a total amount of EUR 2 351 million for the whole five-year commitment period.

European countries overall on track towards their Kyoto targets

Almost all European countries with an individual GHG limitation or reduction target under the KP (26 EU Member States, Iceland, Liechtenstein, Norway and Switzerland) are on track towards achieving their respective targets. This compares favourably to assessments in previous years.

Six EU.15 Member States (Finland, France, Germany, Greece, Sweden and the United Kingdom), all eleven of the EU.13 (i.e. those joining after 2004) Member States with a Kyoto target as well as Iceland and Norway are on track to achieve their target through domestic reductions only. When removals from carbon sink activities are also taken into account, three additional EU.15 Member States (Ireland, Portugal and Slovenia) are also on track towards their respective targets.

Austria, Liechtenstein, Luxembourg and Spain need to acquire a large quantity of Kyoto units to achieve compliance

To reach their Kyoto targets, nine Member States and Liechtenstein originally placed more emphasis on emission reductions in the non-ETS sectors (compared to 2005 levels), where domestic emission reductions are in general more costly to achieve compared to the ETS sectors.

By the end of the first commitment period, gaps between average 2008.2012 non-ETS emissions and their respective budgets remained in Austria, Belgium, Denmark, Liechtenstein, Italy, Luxembourg, the Netherlands, Spain and Switzerland (taking into account the effects of carbon sink activities). All these Member States intend to close the gap by making use of flexible mechanisms under the KP.

The relative gaps were the largest in Austria, Liechtenstein, Luxembourg and Spain. In order to achieve their targets, these countries intend to acquire significant quantities of Kyoto units at national level. These quantities represent between 13 % and 20 % of their respective base-year emissions (not accounting for the use of credits by ETS operators), compared to an EU-15 average of 1.9 %.

In Italy, the amount of credits which would be necessary to be on track represents only 1.1 % of base.year emissions. However, Italy remains the only EU.15 Member State using flexible mechanisms that has not provided information on the amount of credits it intends to purchase, nor on the financial resources allocated for this purpose.

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