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Why Europe must back a technology-neutral energy policy

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Some observers believe the Europe 2020 package, coupled with the economic showdown, is bringing the EU’s greenhouse gas emissions under control. Bryony Worthington disagrees and looks to the EU’s 2030 package for the necessary measures.

The growing risk of climate change means that energy systems that have served us well for so long now have to change. Climate science indicates that to stay within the agreed limit of no more than a 2ºC average global increase in temperature, greenhouse gas emissions need to drop to zero, and that in the second half of this century we will probably need to remove those gases from the atmosphere to make up for today’s high emissions levels.

The profound implications for our energy markets mean that the question is how best to manage this transition while maintaining security of supply, and without massive increases in energy bills. There’s no straightforward answer because in theory the most cost-efficient way is to apply a price to emissions that allows market forces to establish least-cost solutions. In practice, though, this has already proved difficult. The EU’s emissions trading scheme (ETS) introduced in 2005 a carbon price affecting half of the European economy, and it hasn’t fixed the problem. It wasn’t then, and still isn’t, the only EU policy for reducing emissions. The EU’s 2020 energy and climate package included policies to boost renewables and increase energy efficiency. The renewables policy was as much an industrial innovation and energy security policy as a carbon policy, and it resulted in significant investments across the EU. Energy efficiency policies have helped to overcome non-price barriers to carbon abatement, and demand for energy is falling further as these policies are supplemented by warmer than average temperatures.

Technology neutral subsidies need not exist forever since their purpose is to stimulate innovation and bring down costs of commercial solutions

The 2020 package, combined with slower economic growth following the 2008 banking crisis, has meant that Europe’s emissions are falling and the carbon price under the ETS is low. Some therefore see little need to do more to manage the transition to a low carbon economy, but I disagree. We need to increase our efforts, but use a different approach.

Europe’s growth of renewables has not displaced the most carbon intensive forms of energy; high gas prices and low coal prices have meant higher coal burn. This has kept the carbon intensity of the economy higher than it would otherwise have been. Large subsidies have been available in the power sector for renewables, but in industrial sectors there have been few incentives for investment in decarbonisation beyond incremental increases in efficiency. The focus of any industry facing a low but rising carbon price has been on securing compensations and exemptions. Few have argued in favour of support for investment in decarbonisation technologies, with the result that there is no support mechanism for CCS, CHP, gas or nuclear in industry beyond a weak carbon price. And the carbon price mechanism is designed in such a way as to penalise investment and sometimes reward the offshoring of production, so further exacerbating industries’ investment woes. This has to change.

Fortunately, there are signs that the EU’s 2030 climate and energy package will introduce changes. But it is far from clear that the new approach needed will actually be adopted. If Europe is serious about achieving deep long term emissions cuts here’s what it will need to do.

The place to start is with the Emissions Trading Scheme, which instead of being the EU’s flagship climate policy has run aground, weighed down by a massive surplus of emissions allowances. Permanently removing excess allowances and introducing an on-going mechanism to adjust for over and under supply has to be Europe’s priority and it is greatly to be hoped that legislation can be passed next year to achieve this.

It is high time we started to take decarbonisation in industry seriously and adopt a carrot and stick approach in which the carrot is sufficiently well designed to change investment behaviour

Sorting out the surplus is only part of the solution. The ETS also needs to properly reward investment, and not to create windfalls for companies that reduce production within the EU. This can be done through allocation methodologies that take production levels into account.

With a functioning carbon pricing policy in place once more, the need for additional policies to deliver emissions reductions is reduced, so the cost of abatement per tonne saved can also be reduced. But it would be wrong to assume that a higher carbon price is all that is needed. For one thing, at the moment the carbon price covers only half of the economy, and for another there are plenty of non-price barriers to saving emissions and money that policy-makers should address. Subsidies for specific technologies like renewables should be reformed and already the EU has decided to drop legally-binding elements of the renewables targets. The risk remains that non-carbon elements of these subsidies like industrial innovation and energy security will be lost, thus slowing the speed of the EU’s transition.

To counter this, a technology-neutral approach to creating markets for zero carbon technologies across all sectors should be adopted. For power generation, this could be achieved by setting performance standards relating to the carbon intensity of supplied electricity – similar to the standards applied to vehicles industry. For industry, a system for spurring investment in innovation can be designed which rewards zero carbon heat production, as opposed to electricity. This could be funded out of ETS receipts and delivered via long-term contracts or tradable certificates. So far though, if no renewable technology to decarbonise industrial processes is available, industrial players have been frozen out of market-based incentives, with the carbon price unable alone to provide the level of incentive that’s needed.

It is high time we started to take decarbonisation in industry seriously and adopt a carrot and stick approach in which the carrot is sufficiently well designed to change investment behaviour. Technology neutral subsidies need not exist forever since their purpose is to stimulate innovation and bring down costs of commercial solutions. But just as renewable subsidies had a role to play, industrial decarbonisation will need targeted temporary support.

There is the need for a much more dynamic approach to energy R&D focussed on high risk, high reward breakthroughs in the way that the successful DARP-E model in the U.S. does. Of course, full decarbonisation needs to be achieved, but it must be done at least cost and securely. For this we will need to deploy a whole host of technologies, some of which we know about and have already made progress in, but many others are still only ideas in labs. Europe has a proud history of invention and innovation but we are less good at commercialising new technologies. Market-led innovation already occurs where there are sufficient deployment incentives to justify investment, but these are likely to deliver only incremental improvements and not step changes – across the EU, the state still has an important role to play here.

I hope that Europe will enter the Paris climate negotiations in December with an ambitious overall goal for reducing emissions along with a realistic plan for delivering a long-term transition of our energy systems. We cannot focus all our attention on the power sector to the detriment of heavy industries, and we cannot pretend that only one or two technologies will deliver the cuts we need. We Europeans must secure investment in innovation and show that it really is possible to run an industrialised economy and to reduce greenhouse gases. If we want China, India, Brazil, Mexico and South Korea to commit to reducing their emissions, they will want to know how they can do so in the context of their own industrialisation. We must have answers when they ask us how to decarbonise refining along with the production of metals, chemicals, cement and ceramics.

It is not too late – we still have five years before the 2030 energy and climate package starts. There is much detail still to be developed and negotiated, but we can yet arrive at a policy package that secures Europe’s place at the forefront of zero carbon innovation and investment. 

 

This article first appeared in the Spring 2015 issue of Europe’s World.

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Green Planet

Cleaning up couture: What’s in your jeans?

MD Staff

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Today you made a decision that could change the face of the planet. You decided what to wear.

When was the last time you looked in your wardrobe and couldn’t find anything suitable?

Screen stars on Netflix wear stunning but different couture in every episode. Celebrities boast cutting edge design, always pictured in a new outfit. Are you keeping up? Don’t worry. The latest news is that you don’t have to.

If you listen to Deputy Mayor of Paris—and Parisians would know—Antoinette Guhl, as stated in the report A New Textiles Economy: “Circular is the new black! We need a fashion industry based on three principles: clean, fair and good.”

Our clothing is an expression of individuality. We use it to make ourselves unique as well as provide comfort and protection. But the environmental cost of our clothes is adding up.

The industry’s environmental footprint is immense. It extends beyond the use of raw materials. Combined, the global apparel and footwear industries account for an estimated 8 percent of the world´s greenhouse gas emissions.

Lifecycle assessments show—taking cotton production, manufacture, transport and washing into account— it takes 3,781 litres of water to make one pair of jeans. The process equates to around 33.4 kilogrammes of carbon equivalent emitted, like driving 111 kilometres or watching 246 hours of TV on a big screen.

Even just washing our clothes releases plastic microfibres and other pollutants into the environment, contaminating our oceans and drinking water. Around 20 per cent of global industrial water pollution is from dyeing and textile treatment.

Yet globally, the industry wields considerable power. It is worth US$1.3 trillion, employing around 300 million people along the value chain.

UN Environment’s Llorenç Milà i Canals, Head of the Life Cycle Initiative, said fashion presents a massive opportunity to create a cleaner future.

But steps must be taken to involve everyone involved in the value chain to address environmental hotspots; define and take bold action on them.

“All actors must play their part in redefining the way value is generated and kept within the apparel sector, moving away from disposable apparel to a sector that generates and sustains value for society without polluting the environment,” he said.

As consumers, this means buying less. Some studies estimate that the average garment is worn ten times before being discarded. Demand for clothing is projected to rise two per cent a year—but the number of times we wear them has dropped one third compared to the early 2000s.

This waste costs money and the value of natural resources. Of the total fibre input used for clothing, 87 per cent is incinerated or sent to landfill. Overall, one garbage truck of textiles is landfilled or incinerated every second.

There are steps we can all take today. Like checking materials are durable and keeping them for longer. Reducing the amount of clothes we buy, reusing and buying second hand items and recycling. Wash them less and smarter: use concentrated liquid soap rather than powdered detergent, which is abrasive and washes more fibers into water.

But while our attitude towards our clothing needs a rethink, so too does the way in which our clothes are produced. Collectively, on a large scale, reducing our environmental footprint requires cutting resource consumption and designing pollution out of clothing altogether.

The fashion industry is starting to take note.

A Pulse survey of decision makers from all industry segments confirms that sustainability is climbing up corporate agendas. Of executives polled, more than half said sustainability informed their strategy—up from last year.

Innovative new technology can play a part in cutting resource use. Cotton and recycled polyester still put a strain on the environment, so finding and developing new sustainable materials is key to reducing natural resource consumption.

In the meantime, developing countries—with a nascent textile industry —have an opportunity to build circular models into production from the start. They can set the bar high for the rest of the world to follow suit.

Ultimately, the key to a sustainable future lies in radically rethinking the way we consume and use clothing, and disrupting current business models. That means buying less. And it means putting pressure on our fashion industry to design a more responsible product.

UN Environment

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Green Planet

Leading international organizations commit to climate action

MD Staff

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Today, at the United Nations Climate Change Conference (COP 24) in Poland, 15 international organizations jointly announced a commitment to make their operations climate neutral.  The organizations will measure their greenhouse gas emissions, reduce them as much as possible and compensate the currently unavoidable ones with credible carbon credits.

With over 2 million tons of CO2 per year in emissions, and more than 50,000 staff, the aggregate action by this organizations represents an important example that may be taken at all levels of society.

Some of the participating organizations have already achieved climate neutrality, while others are getting started in this journey. Still others were advanced in their sustainability strategy and are now going further by committing to go all the way to climate neutrality. Through this commitment, it is expected that organizations with more experience will support those that are at the early stages and that best practices will be shared.

This initiative demonstrates the commitment of the participating organizations to climate action, while serving as inspiration for others to follow suit and contribute to the goal to achieve global climate neutrality before the end of this century, as established in the Paris Agreement.

The international organizations that announced their commitment to climate neutrality are:

  1. Organization for Economic Cooperation and Development (OECD) Secretariat
  2. Common Markets for Eastern and Southern Africa Secretariat (COMESA)
  3. Eastern Africa Development Bank (EADB)
  4. Western Africa Development Bank (BOAD)
  5. Asian Development Bank (ADB)
  6. Pacific Community
  7. ICLEI-Local Governments for Sustainability
  8. European Investment Bank (EIB)
  9. European Bank for Reconstruction and Development (EBRD)
  10. Southern African Development Community (SADC) Secretariat
  11. Inter-American Development Bank (IDB)
  12. International Paralympic Committee (IPC)
  13. Latin American Energy Organization (OLADE)
  14. World Travel & Tourism Council (WTTC)

These organizations join agencies throughout the United Nations (UN) system which in 2007 adopted a strategy and a roadmap to reach climate neutrality by 2020. Over half of all UN system entities are now climate neutral, representing 39% of total UN emissions as featured in the 2018 Greening the Blue report. The UN Headquarters is also becoming climate neutral for the first time in 2018.

Some of the actions that these organizations are implementing to reduce their greenhouse gas emissions include the installation of solar photovoltaic systems, policies for reduction of air travel, upgrading of insulation and lighting systems in buildings, reduction of the amount of paper used at conferences, installation of efficient cooling systems, promotion of car-pooling schemes among employees, establishment of sustainable procurement policies, and enhanced collection and recycling of waste, among many others.

The ambition is that other international organizations will join this commitment in the near future, helping multiply the message of the importance of taking immediate action at all levels of society to avoid the worst consequences of climate change.

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Growing gap between ambition and action as the world prepares for a future with increasing climate risks

MD Staff

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While climate consciousness across the globe is on the rise, the fourth UN Environment Adaptation Gap Report released today has revealed a considerable gap between countries’ preparedness for climate change and the actual measures that should be put in place to prepare communities for a future of increasing climate risks.

The research particularly underscores a growing divide between the estimated annual costs of adaptation and the actual global investments in resilience measures, drawing a distinct connection between our adaptation to climate change and sustainable development that results in healthy communities and thriving economies.

Climate change will have a significant impact on human health over the next few decades, and while progress has been made in reducing climate-change related diseases and injuries, current adaptation efforts are by no means sufficient to minimize future health impact of a changing climate. The research highlights that unless adaptation efforts are strengthened considerably, heat and extreme event-related morbidity and mortality will continue to rise.

Despite voicing considerable concern on the divergence between the global goals on adaptation and actual action being taken at the national level, the report shines a positive light on the growth in national laws and policies that address adaptation. Studies show that at least 162 countries explicitly address adaptation at a national level, through a total of 110 laws and 330 policies.

Looking at the commitment countries made as part of the Paris Agreements, only 40 developing countries have quantifiable adaptation targets in their current Nationally Determined Contributions (NDCs), while 49 include quantifiable targets in their national laws and policies.

Low- and middle-income countries have shown consistent progress. However, without signs of acceleration, catching up with wealthier countries to bridge the gap in adaptive capacity will take many decades under current rates of improvement.

The Adaptation Gap Report identifies what is urgently needed to further narrow the adaptation gap in health, both today and in the future, is political will and the necessary financial resources to implement the most important actions related to climate resilient health systems; early warning systems and a broader development agenda aimed at reducing vulnerability to climate-sensitive health risks, particularly infectious diseases and food and nutritional insecurity.

UN Environment

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