The Clock is Ticking on the EU’s European Green Deal

Well over half of the way into the first 100 days of the freshly installed European Commission (EC), led by President Ursula von der Leyen, the design and scope of the EU’s much hyped European Green Deal (EGD) is still quite vague. Serious questions loom about the plan’s ability to help Europe hit UN climate targets. Paul Hockenos explains why.

Von der Leyen’s bombastic The European Green Deal paper, released shortly after the new Commission’s start, declared to the world that the EU was poised take up the lead in battling climate change. In word, it was arguably the most ambitious package of proposals ever, broadly outlining a mission to transform the EU bloc into a sustainable, ultimately carbon-neutral economy. The agenda of its predecessor Commission, the memorandum underscored, would only slash emissions by 60% by 2050. It vowed to do much better – climate neutrality by 2050, namely zero-net emissions – by ratcheting up emission-reduction commitments and hitting them through an extensive array of green policies and programs.

In the era of the EGD, it posited, the logic of climate protection would apply to every sector in the EU’s purview: energy, transportation, agriculture, construction, development, and environment. The specific measures would be spelled out in a draft European Climate Law that the Commission would make public in early March, 100 days after the new Commission’s inauguration on December 1, 2019. To become EU legislation, the European Council, composed of the 27 Member States, and the European Parliament would have to debate, most probably amend, and pass it.

Currently, the Commission is conducting cost-benefit analyses of sector scenarios and engaging in informal bargaining with Member States. It is also clear that many sectors, the most key being agriculture, which accounts for a third of the budget, won’t be greened to aligned with climate neutrality.

The headline issue now on the table – referred to by Brussels insiders as the “elephant in the room” – is the emissions-reduction targets for 2030. This will be the EU’s polestar for the next decade and a signboard to the world that the EU is serious about climate action.

The EU currently aims for a 40% drop in greenhouse gas emissions by 2030. But, Sascha Müller-Kraenner, director of Environmental Action Germany, a Berlin-based environmental advocacy organization, says that the sum of the EU’s past efforts already puts a 45% to 50% drop easily in sight. “The more conservative countries want to bump the official target up to 50%,” Müller-Kraenner says, “which is basically nothing, while apparently von der Leyen herself will go up to 52%. Environmental groups say 65% or more is needed to keep warming below 1.5 degrees.”

The EU Greens wants to push climate target to at least 60% with the aim of becoming a net-zero-emission and 100%-renewables-based economy well before 2050. They argue this is necessary to reach the targets of the Paris summit.

Almost as important as the volume of reductions is the tempo of negotiations. It is imperative to have a reduction commitment and draft law ready for the 2020 UN Climate Change Conference (COP 26), which begins on 9 November in Glasgow, UK. At the COP 26, all of the Paris treaty signatories will present their reduction goals for 2030 – which will define the next decade of climate protection policies, as well as determine, say climate scientists, whether the planet will be able to keep global warming below 1.5 degrees Celsius.

“The EU’s lead is so crucial here because it is seen as being at the forefront of climate protection,” says Müller-Kraenner. “If it is late with its 2030 targets, or if they’re too low, other countries will follow suit. This would derail the whole timetable of the Paris accord. The schedule for the EU being ready for the Glasgow conference is very tight. The Visegrad countries, and Germany too, are resisting the higher targets,” he says, slowing it down.

Germany’s stonewalling has been highly public. The Merkel administration’s economy minister, Peter Altmaier, insists that the car industry should remain exempt from increases in the 2030 reduction target. Altmaier, a vocal supporter of Germany’s prodigious car industry, has repeatedly intervened in EU processes to protect the industry.

“For years, the carmakers have done nothing to reduce CO2 emissions and now they urgently need to make progress,” said Greenpeace’s director Tobias Austrup. “The fleet emissions limit values planned so far are not enough,” he said.

A parallel and closely linked debate is raging over the EU’s 2021 to 2027 budget. NGOs such as Climate Action Network (CAN) Europe, which represents a worldwide network of over 1,300 NGOs, argue that the size and distribution of the highly contested budget will affect Europe’s energy systems and climate protection impact for decades to come.

Compared to the Member States’ national budgets, the EU’s budget is actually quite small, just €162 billion a year, but absolutely essential to get the EGD up and rolling. The UK’s withdrawal from the EU shrinks the budget – a reality that some, including Germany, Denmark, the Netherlands, Sweden and Austria, want to accept, while others insist that member state contributions have to be hiked into order to make up the difference or even increase the budget’s size in order to fund the EGD.

Since the issue is so contentious, groups like CAN are pushing for an EU commitment to orient all of its spending around the principle of sustainability, and earmarking 40% specifically for climate protection programs. This would mean the recipients of cohesion funds and agricultural monies – together two thirds of the budget — would be required to spend them not as they choose but according to green criteria. The EU Greens are for “climate proofing” all EU investments, “so that every single euro invested in the future serves projects that are truly sustainable instead of being locked-in environmentally and climate damaging activities.”

A step in the right direction, the European Investment Bank (EIB) will phase out its support to fossil fuels by 2021 and become the “EU‘s climate bank.”

So far, the Commission is proposing that just 25% of the total budget contribute to climate action and other spending on the environment across multiple programs.

“At the moment, there’s no compromise in sight,” says Markus Trilling of CAN, referring to budget size and spending principles. Von der Leyen’s grand vision is to stimulate billions in private sector investment for the EGD. CAN wants to see the budget expanded in order to guarantee that the EGD’s initiatives are funded.

The countries most affected by the cohesion and agricultural monies naturally insist on spending the funds as they want to, which includes investments in fossil fuels and conventional agrobusiness. Just last week, Croatia caused an uproar when it came to light that the Commission had issued the country a €101 million grant – through the EIB – for Croatia LNG, a project for infrastructure to receive, store, reload, and re-gasify liquefied natural gas (LNG).

“There is a fundamental incompatibility between aiming, on one hand, at a low-carbon economy, while on the other hand pumping millions of euros into gas infrastructure,“ the op-ed’s author Elena Gerebizza argued in euobserver.  Gerebizza works for the Italian NGO Re:Common, which is a member of Counter Balance, a group that challenges public investment banks.

Ms. von der Leyen must decide whether she is serious about a Green Deal that is more than a hip, politically correct label. Time to do so is shorter than she might think – and her biggest obstacle is her own party’s officials in the halls of power in Berlin.

Ukraine: “Renewables must not be a business for only a few!”

Ukraine and energy issues are often too narrowly associated with geopolitics and gas infrastructure in debates in the United States and Western Europe. Often very little is known about climate policies and the ongoing energy transition within the country. Iryna Holovko, Center for Environmental Initiatives “Ecoaction”, board member talks with Robert Sperfeld, Senior Programme Officer East and South East Europe Division at the Heinrich Böll Foundation, about the issue of climate protection within the Ukrainian society. For further information, have a look at the Heinrich Böll Foundation’s recently published Fact Sheet on decarbonisation as a matter for EU-Ukraine partnership.

Robert Sperfeld (RS): To what extent climate protection is a priority issue for Ukrainians?

Iryna Holovko (IH): Definitely, climate change has become a much bigger issue in Ukraine in the last two years following both Greta Thunberg’s worldwide youth mobilization and more often and extreme weather events such as snowless winters and much hotter summers. In 2018, people named draughts and floods, as well as water shortage, among the main ecological problems, but they often did not relate them to the climate change. In the last two years, Ukrainian media have covered climate change, its reasons and consequences, much more extensively than before. There is the Fridays for Future movement in Ukraine, too. We had the biggest Climate March in Ukraine’s history  in September 2019 bringing 2000 people to the streets to demand strong actions from the government towards a transition to 100% renewable energy by 2050. More than 12 000 people have signed an online petition demanding political responses to escalating negative consequences of climate change.

RS: After two years of growth of renewables and declarations by several cities to decarbonise: is Ukraine irreversibly on the right track?

IH: Well, nothing can be irreversible here. In the first three quarters of 2019, 3,3 GW of renewable electricity generation capacities have been installed. This is more than in the last 10 years combined (2,1 GW). But can this be seen as sustainable growth? Unfortunately not. Such growth happened due to exceptionally high “green tariffs” that were replaced by a new auctions system starting from January 2020. That is why all investors rushed to finish as much as they could by the end of 2019. Perspectives for the next periods are rather uncertain, as the auction rules were just approved in late December 2019, and it is not clear when auctions will start functioning and how well the proposed design will provide for a further active development of the sector. The auction rules should ensure fair conditions for all players, including small and medium companies; otherwise we will continue to see a lack of acceptance for renewables development among the wider population. A handful of big oligarchic business players already dominate and monopolise this sector. All this has created tremendously negative reputation of the renewables in the eyes of the Ukrainian people. The new government must make every possible effort to fix this situation if we want to see further transition to clean and affordable energy in Ukraine.

RS: What has changed on energy policy after the new President and government took office?

IH: At the very start there was a radical institutional change – merging the Ministry of Power and Coal Industry with the Ministry of Environment to create a new joint Ministry of Energy and Environment Protection under the lead of Oleksiy Orzhel, who was previously the chairman of the Ukrainian Association of Renewable Energy. The Minister says the reason for the merger was the need “to change the view on the issue of environmental protection, considering global trends in climate protection”. which is definitely a good sign. In September Mr Orzhel committed the new Ministry to do everything possible to lead the country towards 100% renewable energy by 2050 or faster.

Several statements were made by the Minister, including during the COP25, that the government plans to close down all the unprofitable state coalmines, and that the future energy miх of the country should not include coal.

Also, he expressed doubts on the necessity to complete two nuclear units at Khmelnitsky NPP, the project that was pursued by the previous government, but was heavily criticized by us and international experts for being outdated, dangerous, prone to corruption and increasing our dependency on Russia in the energy sector. We are yet to see, however, how the statements will be translated into concrete policy changes. This year Ukraine has to revise and submit to UNFCCC its new nationally determined contribution (NDC) on GHG emission reduction and to develop the National Energy and Climate Plan (NECP) under the Energy Community Treaty framework. These are the processes where the new government will have to prove its commitment to addressing climate change and paving the way for the country’s energy transition.

RS: What has been already achieved with the energy sector reforms in the last years and which are the major remaining challenges?

IH: For quite a few years now, a lot of focus was set on reforming the gas and electricity sectors to bring them in line with the Third Energy Package requirements. Some reasonable progress was made in energy efficiency in buildings with an Energy Efficiency Fund finally becoming operational in 2019. These are the issues that the international community has been pushing (and helping) the most in the energy relationships with Ukraine. Besides these, the Law on monitoring, reporting and verification (MRV) of GHG emissions was finally adopted by the end of the year, being the first step towards development of market-based emission reduction instruments which are not yet in place in Ukraine.

Numerous challenges remain. Ukraine remains heavily dependent on coal, nuclear and gas for its energy production. Nearly all electricity-generating facilities are from Soviet times, and face the end of their lifetime. Still, we rely on them to produce nearly 90% of our electricity, with only about 10% provided by renewables, including large hydro. Energy and carbon intensity of GDP in Ukraine is three times higher than the OECD and EU average. The energy saving potential of the residential sector remains largely untapped, producing about EUR 2,7 billion losses annually. Renewable energy sources have a huge potential, and their further deployment will largely depend on the success of the new auction scheme in ensuring cost-effective and competitive development of renewables and avoid monopolization of the sector. We also lack a legal framework and financial instruments for community-based renewables projects – the government needs to address this gap, as community-based projects are drivers for both fuel-related emission reduction and strengthening of energy independence.

On the strategic level, the official strategic documents need to reflect the new government’s oral statements towards addressing climate change and renewables development. A lack of ambitious targets for the energy system transformation puts Ukraine under risk of missing its chance to timely re-orient and align its energy system with the new climate change reality and thus the country may face severe social and economic consequences already in the coming decades.

RS: What does Ukraine expect from the EU as a partner in the European Energy Community and the Eastern Partnership initiative?

IH: I believe, the EU-Ukraine partnership should become more focused on shaping Ukraine’s decarbonisation agenda on all levels. On the national level, the EU should support Ukraine in aligning its climate targets with the goals of the Paris Agreement and provide help for implementation of these targets with financial and technical instruments. Renewables and energy efficiency should become the true priorities of EU-Ukraine energy relations. On the regional and the community level, the support is needed to launch community-level renewable energy projects, as this crucial sector is stuck with the lack of enabling legislative framework and financial schemes. And, of course one should not forget about coal-dependent regions, especially Donbas, which is in desperate need of support in re-orienting and diversifying the economy, as the coal mines will close down. Now, there are new opportunities opening up in Ukraine’s regions, such as creation of the Platform for Sustainable Development of Donbas towns, which allows to have dedicated local stakeholders involved in shaping the region’s transformation strategy. The EU’s strategic support would be important and timely now to help Ukrainian government in drafting a national Just Transition plan, taking into account the interests of coal mining regions and communities, as well as best experiences that many EU countries already built up in coal regions transformation.

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