Climate policy in the EU and Germany to fulfill
their NDCs under the Paris Agreement
Elmar Kriegler, Michael Pahle
Debrief Workshop „Towards the Paris Agreement“, Tokyo, Oct 3, 2017

The Paris Agreement
brings together nationally determined action with global
coordination to reach the long term ambition of• holding global mean temperature well below 2oC• pursuing efforts to limit temperature increase to 1.5oC

Photo H. Bach2

Global Mitigation Pathways staying well below 2oC

Re‐directing investmentsfrom fossils to low carbonand efficiency solutions

Peakin 2020Carbon neutral economy
Electrification of end uses
Challenges:• Freight transport,aviation, shipping• Heavy industry
Carbonneutrality

Net CO2removal

Steepemissions
reduction

Power sector decarbonization
Coal phase‐out

LIMITS Study: Kriegler, Tavoni et al., 2013, Clim Change Econ 04:1340008

Elmar Kriegler
Potsdam Institute for Climate Impact ResearchCompensate residual emissions(incl. CH4, N2O from agriculture)
Compensate budget overshootEU Regulatory Framework for Climate & Energy• Long‐term aspirational climate goal: GHG emission reductionof ‐80% to ‐95% until 2050 r.t. 1990

European Commission, COM(2011) 112

EU Regulatory Framework for Climate & Energy• Long‐term aspirational climate goal: GHG emission reductionof ‐80% to ‐95% until 2050 r.t. 1990
• Climate & energy package (2008) in place, defines targets for2020 and is well on track:• Climate: ‐20% GHG emission reduction r.t. 1990
• Renewables: 20% in final energy consumption• Efficiency: 20% primary energy savings• 2030 climate & energy framework upcoming (2014 Council
decision), increases ambition of 2020 package:• Climate: ‐40% GHG emission reduction r.t. 1990
• Renewables: 27% in final energy consumption• Efficiency: 27% / 30% primary energy savings

EU Climate & Energy Policy Framework:
A complex web of targets & instruments
EU level
GHG EmissionReduction
ETSSectors

EU ETS* Power sector* EI industry* Civ. aviation

Energy Efficiency

Renewable Energy

Non‐ETSSectors

Other Measures* Car emission /biofuel standards

EU targets broken down to member states
National level
Non‐ETS
Targets

Efficiency
Targets

RenewableTargets

Nationalmeasures

Nationalmeasures

NationalmeasuresNon‐ETS sectors: Effort sharing decision (ESD)• Effort Sharing Decision (ESD): EU target of ‐10% until 2020 (r.t.
2005) in non‐ETS sectors (e.g. transport, buildings, waste etc.)• Differentiated targets for member states according tocapabilities (CBDR principle)

Source: http://ec.europa.eu/clima/policies/effort/index_en.htm

Instrument view: Prime example is EU ETS• EU ETS has experienced sharp decline in prices since 2011

Source: ICE Futures
Europe• Prices are thought to be too low to induce sufficient mitigation
 Why not just “fix the price”? Debate about minimum permit
price or additional national carbon taxation

THE ENERGIEWENDE IN GERMANY

Germany: Not on track with climate targets
GHG Emissions [Mt]

Targets [Mt]

1200
1000

Trend800
749[‐40%]

600562[‐55%]

400200

2030

2020

2005
2006
2007
2008
2009
2010
2011
2012
2013
2014

0

• According to Government projections (BMUB 2014) GHG emission reduction
in 2020 only ~33% (target: ‐40% / 740 Mt)• Even larger gap for 2030 target (‐55% / 562 Mt)

Power Sector: A very different picture• Considerable increase of renewables in power consumption
over last 15 years• From 6% in 2000 up to 33% in 2015, 27 percentage points
Share in power consumption [%]353025
Other20

Biomass
Solar PV

15Wind10Hydro5Source: BMWi (T20)
20152014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

0

 Major driver: RE feed‐in tariff (EEG) implemented in 2000
M. Pahle, Reserach Domain III

EEG: Main features & evolution• Main features of EEG / feed‐in tariff are:• Guaranteed payments over 20/30 years (tariff set by regulator)• Guaranteed up‐take of all production (TSO obligation)• Guaranteed grid connection at no costs (TSO obligation)

 By design basically no risk for RE producers to ensure• access to finance (bankability)• participation of smaller producers (home owners, cooperatives)• But “invest & forget” created problems with cost‐effectivenessdue to lack of market integration (Pahle et al. 2016):• Major reform in 2016: Level of tariffs set in competitive auction(exceptions for smaller plants, de‐minis rule)But more RE not necessarily good for climate• While RE share increased, emission remained at basically thesame level because no switch from coal to gas occurred
400
350

Emissions [Mt]300250
Other200Natural Gas
150

Coal10050

Source: BMWi (T11)
2014

2013

2012

2011

201020092008

2007

2006

2005

2004

2003

2002

2001

2000

0

• Main reasons: (a) price effect of RE and (b) low ETS prices
reduce gas production

Conclusion• Europe aims to be a leader in international climate policy• It has committed to 20% GHG reduction until 2020 (2nd phase of KyotoProtocol) and 30% GHG reduction until 2040 (INDC) relative to 1990
• Those targets have been coded into law. The current challenges are tostrengthen carbon pricing in the ETS and to distribute the Non‐ETS target
between member states (burden sharing)• The EU‘s long term ambition is to reduce GHG emissions by 80‐95% in 2050.
A 2050 roadmap for the 80% target exists, a mid‐century strategy (MCS)
under the Paris Agreement is discussed.
• Europe’s climate and energy policy is a complex web of EU‐level andnational policies (Multi‐level governance challenge)• Germany’s Energiewende has lead to a large increase of renewable power,
but coal power has not been reduced significantly. Renewables mostlyreplaced nuclear power.
• Germany is not on track to meet its 2020 and 2030 GHG reduction targets.
Will require phase‐out of coal power.

THANK YOUM. Pahle, Reserach Domain III

Energiewende targets

Source: 4th Energiewende Monitoring Report (2015)

Costs of renewable support
25
20
15

Costs [Bil. €]10

Costs Solar PV [Bil. €]52016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

0

2000

Source: BDEW (2016)• Annual costs of support has risen to more than 23 bil. € (>60 €/MWh)• ~50% for solar pv (~20% of all RE power production)  surge in 2010‐2012• Expected decline after 2025 when old installations stop receiving subsidies
M. Pahle, Reserach Domain III

Contact
Dr. Michael Pahle
Head of working group "Energy Strategies Europe & Germany"
Potsdam Institute for Climate Impact Research (PIK)
Research Domain III (Sustainable Solutions)
PO Box 60 12 03, 14412 Potsdam, Germany
Tel: +49 331 288 2465
Fax: +49 331 288 2570
michael.pahle@pik‐potsdam.deDr. Elmar Kriegler
Vice chair of Research Domain III (Sustainable Solutions)
Potsdam Institute for Climate Impact Research (PIK)PO Box 60 12 03, 14412 Potsdam, Germany
Tel: +49 331 288 2616
Fax: +49 331 288 2570
kriegler@pik‐potsdam.de