Dear reader,
Welcome to the new edition of Publyon’s EU Energy and Climate Policy Update. In this bi-weekly update, Publyon provides you with the latest insights on the ‘Fit for 55’ negotiations as well as updates on the energy transition, the energy crisis and the EU’s response, including other relevant news on the EU’s climate and emissions reduction policies.
The spotlight
COP28 climate talks take centre stage
COP28, the United Nations climate conference convening representatives from nearly 200 nations to deliberate on the future of our climate, is set to commence in Dubai on 30 November. In preparation for this event, climate and environment ministers from the EU Member States have collaborated to establish a cohesive stance that they can present at the conference.
After a marathon debate, the EU negotiation mandate pledges for a phase out of unabated fossil fuels, but does not include references to unabated energy production as the EU will push for a “predominantly fossil-free” global energy sector.
The lengthy talks arose from a significant rift between progressive Member States, like Denmark and the Netherlands, who pressed for a comprehensive abandonment of fossil fuels within the EU, and more conservative nations including the Czech Republic, Hungary, Poland, and Italy.
What are the unabated fossil fuels?
Unabated fossil fuels refers to the use of fossil fuels where emissions are not captured by carbon capture and storage (CSS) technology. The ultimate conclusions maintained the language concerning the gradual elimination of fossil fuels but removed any mentions of unhindered energy production, aligning with the Commission’s position favouring the exclusive use of CCS technologies to tackle unavoidable industrial emissions. The Council’s conclusion also emphasises that consumption of unmitigated fossil fuels should reach its peak during this decade.
COP28 at stake?
As some Member States are already hesitant about increasing ambitions, the EU faces another challenge ahead of COP28: it will have to negotiate without Frans Timmermans on the world stage in Dubai. Timmermans has been the face of the European Green Deal and EU climate policy but left to be in running in elections at national level.
His successor Wopke Hoekstra will have to defend the EU position and the COP28 is seen as his first challenge to proof he is worth his title. He defends the EU mandate by describing it as both solid and ambitious. However, he acknowledges that COP28 negotiations will be an uphill climb as the EU will have to convince other countries to enhance their climate actions.
The COP27 commitment to establish a fund to aid vulnerable nations in recovering from climate-related disasters is in jeopardy following breakdowns in talks in Egypt. Wealthy nations advocate for the fund’s integration into the World Bank, while developing nations, concerned about their influence within the institution, prefer an independent fund.
This complicates preparations for the upcoming COP28 summit in Dubai. After four committee meetings aimed at defining the fund’s framework ended without resolution, negotiators plan to reconvene early November.
Policy update
Carbon capture and storage finds allies in environment and industry MEPs
This has been a pivotal week for carbon capture and storage (CCS). Firstly, the Environment Committee voted to uphold carbon removal certifications in the EU. MEPs want to accelerate the development and deployment of CCS as it could be a key technology to capture and store permanently CO2 from the atmosphere. Examples are geological storage or permanent bound carbon mineralisation.
Secondly, the Industry Committee also included CCS as strategic technology in its position on the Net-Zero Industry Act (NZIA). Together with CCS, MEPs expanded the list of technologies to include inter alia renewables, nuclear, sustainable alternative fuels (e.g. for aviation), biogas, energy storage, heat pump and hydrogen.
The European Parliament will vote on its position on the two proposals during the Plenary at the end of November (20-23).
CO2 reduction targets for trucks and buses, Commission targets mostly retained
While we reach the end of October, the revision of the CO2 emissions reduction standards for heavy-duty vehicles is approaching the end of the decision-making procedure. The proposal aims to bolster CO2 reduction requirements for these vehicles, emphasising the importance of building the necessary recharging and refuelling infrastructure.
The Council of the EU reached its position on the proposal maintaining the Commission’s targets. The MEPs in the Environment Committee also adopted their report. MEPs raised the 2035-2039 target from 65% to 70% the Commission’s proposal and retained the 45% target for 2030-2034 and 90% target from 2040. Furthermore, they voted for all newly registered urban buses to be zero-emission by 2030 (while the Council proposes 2035), with potential exemptions for biomethane-fuelled buses until 2035.
The ENVI report will be voted in Plenary in November, after which Trilogue negotiations with the Council can commence.
EU needs to accelerate reduction of carbon emission to meet targets
The latest State of the Energy Union provides unflattering data on the effort made by the EU and its Member States to cut greenhouse gas emissions. With the Climate Law and Fit for 55 package, the EU pledged to reduce emissions by at least 55% by 2030. However, according to estimates from the European Environment Agency, current policies will achieve not even 50% by 2030.
Despite the effort made to phase out Russian gas and boost renewable energy, reaching the EU targets set in the Fit for 55 legislations will require a significant acceleration in the coming years. Commissioner Hoekstra mentioned that further work and ambition in cutting emissions is required in the agriculture, transport and building sectors. Natural carbon sink also needs to grow to meet EU climate targets.
Powering a clean future: Clean Technology Report
The Commission adopted a report on the EU initiatives put forward to promote and support the development of clean technologies. What does this preliminary assessment entail? Firstly, the Commission highlights proposals under the European Green Deal, the Fit for 55 package and the many investments in clean technology.
Secondly, the report analyses the impact of the US Inflation Reduction Act (IRA) on the European economy. The Commission has determined that it is premature to conduct such an analysis as the full extent of its effects is not yet completely visible. Hence the ‘preliminary’ assessment.
On the same date, the Commission also presented its plan to accelerate and secure the deployment of wind energy in the EU. Keywords are financing, upskilling, trade agreements and accelerated permitting. Do you want to know more? Check out our latest social media post.
Back on the grid: Member States reach an agreement on electricity market reform
Member States agreed on their position on the proposal to amend the EU’s electricity market design (EMD). Following the energy crisis, the review of the EMD aims to make electricity prices less dependent on changing fossil fuel prices, accelerate the transition to renewable energy and shield consumers from price spikes.
The deal has been months in the making, slowed down because of disputes between France and Germany surrounding France’s subsidised nuclear energy sector. The resulting compromise saw the disputed two-way contracts for difference, which is feared to create unfair competition in favour of cheap French nuclear energy, made optional for existing infrastructure.
Although the Council reached an agreement, some Member States are worried by the inclusion of the contracts for difference and a derogation for coal as a backup power generation source. They argue that including these measures gives a wrong signal leading up to the COP28 in Dubai.
Following the green light of the Council, negotiations with the European Parliament begun with a first Trilogue meeting on 19 October. The next meeting is scheduled for 16 November.
Parliament amends Euro 7 emission standards for cleaner vehicles
Following the Council’s watered-down position on the Euro 7 standards, the Environment Committee also partially lowered the ambition of the original Commission’s proposal. The Euro 7 rules entail stricter limits for pollutant emissions like nitrogen oxides, particulate matter, carbon monoxide, and ammonia.
MEPs delayed the timeline for the new obligations by two years, decreased the exhaust emission limits for vehicles and reduced testing requirements. Nevertheless, some ambition was added as regards requirements for brake particle emission, tire abrasion rate and performance requirements for battery.
These measures, along with an environmental vehicle passport and extended vehicle lifetime requirements, aim to balance environmental goals with manufacturing interests. The vote in the European Parliament is scheduled on 8 November.
What’s next?
- On 26 & 27 October, the European Council is meeting, where EU leaders will discuss progress and measures to create a robust and future-proof economy that secures long-term prosperity.
- On 8 November, the European Parliament will vote on Euro 7.
- From 20-24 November its European Hydrogen Week, which includes a multiday conference with over 25 sessions and 200 expected speakers to deep dive into all things hydrogen.
- On 29 November the European Commission will publish its action plan to facilitate grids roll-outs.
Blog
Packaging and Packaging Waste Regulation: impact on businesses
On 30 November 2022, the European Commission published the Packaging and Packaging Waste Regulation (PPWR). It aims to reduce packaging waste produced by the EU and move away from linear packaging models, in line with the EU’s ambition to transition to a circular economy. For businesses making use of packaging, the revision sets new challenges. All businesses will need to review their packaging portfolios and make sure that they are aligned with new requirements for recyclability, reuse, recycled content, and packaging minimisation.
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Sara Orcalli
Hi, my name is Sara and I am curating the Energy & Climate Policy Update to bring you the latest news on ‘Fit for 55’ as well as energy and climate insights. Do not hesitate to reach out should you have any questions or if you want to know how EU energy and climate policies might impact your business.
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