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.
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The spotlight
Halfway there: COP28 reaches the midpoint
COP28’s first week is a wrap, and the collaborative effort of 200 nations combating climate change is in motion in Dubai. Amidst international tensions, the primary focus centres on funding mechanisms and the future trajectory of fossil fuels.
‘‘Loss and Damage’’ climate fund gains traction
The COP28 kicked off with the securing of a groundbreaking deal for a climate ‘Loss and Damage’ fund. On day one, the historic launch of the fund took place with initial pledges from the UAE, UK, US, Japan, and EU Member States collectively. Despite initial concerns and compromises, the fund aims to aid vulnerable communities facing climate-related impacts. Initially hosted by the World Bank for four years, the fund welcomes diverse sources, including grants, loans, and innovative financing.
Developing countries initially opposed the World Bank’s role, but a compromise was reached with conditions and an exit plan. The agreement does not impose obligations on any country, however, it ‘urges’ developed countries to contribute, while only ‘encouraging’ others to do so. The voluntary outcome left many discontented, including Commissioner for Climate Hoekstra, who, ahead of COP28, called on major emitters such as China, the UAE, Saudi Arabia, and Qatar to become donors.
The fund’s success hinges on attracting diverse financing, with projections estimating a $400 billion annual cost for developing countries by 2030. The agreement still requires formal approval by the COP28 Assembly.
Controversy surrounds fossil fuel phase-out pledges, yet positive reception for renewable commitments
World leaders made sweeping declarations, including a commitment by 118 countries to triple renewable energy capacity and double energy savings. However, the ‘Oil and Gas Decarbonisation Charter’ signed by major companies raised scepticism, with critics calling it a Trojan horse for greenwashing. While some praised the impact, others noted that the fossil fuel commitments were voluntary and reiterated previous pledges. This division reflects the challenge of balancing renewable goals with a fossil fuel phaseout. Meanwhile, the US pledged to end coal-fired power generation, putting pressure on other major coal consumers.
From an EU perspective, the situation presents a two-fold scenario. On the positive side, the global commitment to expanding renewable energy aligns with the EU’s climate targets and renewable energy objectives. However, the lack of a concrete and enforceable plan for fossil fuel phase-out is viewed with concern, given the EU’s advocacy for robust climate action.
The controversial statement made by the COP28 President disputing the need for a fossil fuel phaseout, stating there is no science supporting it, also raises concerns about the Summit’s efficacy.
Today, the COP28 takes a break before the talks enter the final stretch. The second half of COP28 is set to delve into critical discussions encompassing skills, nature, food & agriculture, land use, oceans and water. Final negotiations are scheduled for 10 and 11 December. Rest assured: we will keep you updated on all these crucial developments. Stay tuned!
Policy update
Third time’s the charm: France submits its NECP
France is the latest Member State to submit its National Energy and Climate Plans (NECPs), bringing the total of submitted NECPs to 22. This leaves only Bulgaria, Ireland, Latvia and Poland as the only ones that have not yet submitted their NECPs. After many Member States failed to meet the original deadline of 30 June, a second deadline was set at the end of October.
Notably, France’s NECP does not include a renewable energy objective for 2030, instead opting for a decarbonised energy target of 58%, incorporating nuclear power.
France stands out among Member States by contradicting the Renewable Energy Directive (RED III). Even pro-nuclear Member States like Czechia, Slovakia, and Romania have included a renewable energy objective in their NECPs.
France justifies its decision by stating that its primary focus is not on developing renewables but on phasing out fossil fuels. Despite missing the RED III targets, France’s NECPs do incorporate provisions for fostering the development of wind and solar power.
EU institutions agree to cut down (on some) industrial emissions
The Council of the EU and the European Parliament have reached a provisional political agreement on a watered-down directive on industrial emissions (IED). The new rules aim to reduce harmful emissions from industry, including emissions from livestock farms, into the air, water and soil through waste discharges.
What is new? The agreement broadens the scope of the directive to encompass mining activities but excludes large cattle farms. Industrial farms are now defined as those with more than 350 livestock units for pigs, 300 for poultry, and 280 for broilers, which weakens the original Commission’s proposal of 150 livestock units for all.
The co-legislators also agreed on an industrial emissions portal to enhance the public’s access to information related to industrial emissions and increase public participation in its decision-making. The deal must now receive formal approval by the European Parliament and the Council of the EU before entering into force.
The Council of the EU jumps aboard the Greening Freight Package
The Member States adopted their common position on accounting of greenhouse gas (GHG) emissions of transport services forming a crucial part of the Greening Freight Package. The Commission’s proposal aims to enhance the calculation and availability of information regarding GHG emissions from transport services.
Yet, beyond this, the Council’s agreement introduces amendments aimed at preventing the duplication of GHG emissions accounting rules. It further presents measures to facilitate the seamless implementation, particularly beneficial for small and medium-sized enterprises (SMEs).
That’s not all as the Council reinforces the Member States’ position by granting them the authority to impose stricter rules on domestic transport operations. It also ensures close involvement of Member States in implementing the Regulation. Inter-institutional negotiations can commence once the European Parliament also reaches a consensus on its common position, expected in Q1 2024.
Directive on renewable and natural gases and hydrogen: provisional political agreement reached
The Directive is part of the Fit for 55 package, and, along with the corresponding Regulation, comprises the hydrogen and gas markets decarbonisation package. Together, they establish a regulatory framework for dedicated hydrogen infrastructure and markets, integrated network planning, consumer protection, and enhanced security of supply.
Both the Council of the EU and the European Parliament have agreed on the division between Transmission System Operators (TSOs) and Distribution System Operators (DSOs) for hydrogen. This provisional agreement places strong emphasis on ensuring non-discriminatory customer rights to switch suppliers and outlines protective measures for vulnerable groups in scenarios involving gas network decommissioning or repurposing for hydrogen.
Member States retain their authority to determine protection and support measures for vulnerable customers. Additionally, the agreement promotes increased coordination among network development plans for hydrogen, electricity, and natural gas, prioritising sector integration and the ‘energy efficiency first’ principle.
The agreement now needs to be formally adopted by the European Parliament and the Council of the EU before it enters into force.
What’s next?
- 12 December marks the final day of COP28 in the United Arab Emirates.
- On 14 and 15 December, European leaders will convene in the European Council, discussing enlargement, Ukraine and the EU-long term budget 2021-2027.
- On 18 December, Member States will convene in the Environment Council, to discuss the directive on air quality and the Unions certification framework for carbon removal.
- On 19 December, Member States will convene in the Energy Council, to discuss the framework to accelerate the deployment of renewable energy and the Commission’s assessment of the NECPs.
- Take a break: the EU institutions will be in winter recess from 25 December 2023 until 7 January 2024.
Blog
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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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