EN Official Journal of the European Union C 376/110

Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on a roadmap for moving to a competitive low carbon economy in 2050’

COM(2011) 112 final

2011/C 376/20

Rapporteur: Mr ADAMS

Co-rapporteur: Mr ZBOŘIL

On 8 March 2011, the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the:

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on A Roadmap for moving to a competitive low carbon economy in 2050

COM(2011) 112 final.

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 6 September 2011.

At its 474th plenary session of 21 and 22 September 2011 (meeting of 22 September) the European Economic and Social Committee adopted the following opinion by 119 votes in favour, 3 votes against and 2 abstentions.

1. Conclusions and recommendations

1.1 The Committee welcomes the Commission's Low Carbon Roadmap 2050 as a vision for future strategy and urges all the European Institutions to take it fully into account as a guide to the actions and policy development needed to achieve the 2050 goals. In this context the Committee refers to its work on the Resource efficiency flagship initiative and to its proposals for the UN Conference on sustainable development in 2012 (1).

1.2 The Committee urges Council, Commission and Parliament to ensure the full implementation of all existing carbon-related targets for 2020 and to reconsider tightening the 2020 GHG target to a 25 % reduction based on achieved progress of the COP 17 negotiations and expected Community economic development on the way to the agreed 80-95 % reduction by 2050.

1.3 The Committee urges the EU to adopt indicative targets for GHG reductions of 40 % by 2030 and 60 % by 2040 and to follow-up with legally binding policies that would deliver these reductions. Such long-term indicative targets are needed as benchmarks to give predictability and stability for investors and decision takers.

1.4 The Committee recommends the Commission to bring forward a comprehensive new package of measures to incentivise the massive new investment needed to deliver these new targets. The package should include a strengthening of the ETS as a cost optimising instrument for guiding investment decisions as well as other measures to:

— promote energy efficiency in all sectors;

— increase consumer awareness and capacity to use their purchasing power to favour low carbon goods and services;

— support investment in the infrastructure that will be needed;

— promote training and capacity-building in the key sectors.

1.5 The Committee urges the need for an active industrial policy and co-ordinated R&D to support the transition to the low carbon economy. It supports the proposal for Roadmaps as strategic vision guiding the transition process, particularly in relation to power generation, transport, construction and housing, agriculture and waste management.

1.6 It is essential that civil society be fully involved through structured and permanent dialogue on the particular strategic plans.

2. The Roadmap

2.1 The Roadmap 2050 suggests action which could enable the EU to deliver greenhouse gas reductions in line with the 80 to 95 % reduction from 1990 levels reconfirmed by the Council as an EU objective in February 2011.

2.2 In order to achieve this, the Roadmap proposes planning for an 80 % reduction in domestic GHG emissions by 2050, implying the higher 95 % target would come from purchasing offsets in the global carbon market. Domestic emission reductions of the order of 40 % and 60 % below 1990 levels would be the most cost-effective pathway by 2030 and 2040, and in this context, reductions of 25 % by 2020 are seen as part of the progression.

2.3 In the power sector the Roadmap proposes that low carbon technologies should meet nearly 100 % of electricity supply by 2050. This will require major investments in renewables and in developing new smart grid systems throughout Europe, mainly driven by a strengthened ETS system.

2.4 For transport a 60 % reduction in GHG emissions is envisaged by 2050. The Roadmap suggests that biofuels will need to be developed further, particularly for aviation and heavy duty vehicles. But it notes that food security and environmental problems have been linked with biofuel development and underlines the importance of developing more sustainable 2nd and 3rd generation biofuels.

2.5 For the built environment the Roadmap stresses the importance of rapid enforcement of near zero carbon emission standards for new build, and the challenge of upgrading the energy performance of existing stock.

2.6 For industry further increases in energy efficiency and a transition to less energy intensive modes of production are foreseen. There will need to be industry specific solutions and additional sector specific Roadmaps. It is important to ensure that carbon-reducing measures do not simply drive energy-intensive industries to relocate in less-regulated parts of the world (carbon leakage).

2.7 For the agricultural and forestry sector increased energy efficiency and practices that improve the capacity of managed land to sequester and retain carbon are needed. Biomass as a potentially sustainable source of energy is also noted, provided that all its impacts are properly assessed. In general we should be looking for solutions reconciling the growing demand for food or biomass with climate policy goals.

2.8 To achieve all these objectives will require additional public and private investment of around EUR 270 billion annually for the next 40 years. This represents 1.5 % of EU GDP or 8 % of current investment levels – significantly below levels already being achieved in some emerging economies that are seriously engaging with a low carbon economy.

2.9 Additional public resources to fund this investment could be raised from the proceeds of auctioning the next round of ETS emission allowances. All public investment programmes should also be used more systematically to leverage additional private sector funds.

2.10 Other benefits of transition to a low carbon economy include reducing reliance on fossil fuel imports, improving energy security, creating new jobs, and improving air quality and health.

2.11 The communication does not propose specific new policies and measures. It indicates a number of areas where new strategies or policy initiatives will be needed at EU and national level in order to deliver the transition needed over the next 40 years. The Roadmap 2050 shows an important change from new binding targets towards measures. It initiates a debate, with the EU member states deciding if we have new targets or not. There is a crucial political decision ahead: top-down targets or bottom-up technology innovation policy.

3. General comments

3.1 The Roadmap relies on particular economic models to demonstrate the most cost effective pathways to reach the 2050 targets for GHG reductions. In order to establish full confidence in the methodology more information needs to be made available about the construction of the models, the data that is used in them and the sensitivity tests that are applied. Nevertheless the methodology already appears sufficiently robust to support the main conclusion that investment levels need to rise substantially to deliver a low carbon economy by 2050.

3.2 In particular the Committee strongly supports the Roadmap's conclusion that early progress is vitally important for cost-effectiveness. Early progress can accelerate introduction of new technologies, lower their prices, avoid expensive and wasteful new investment in short-lived carbon-intensive plants and generate economic momentum for the changes needed.

3.3 A roadmap is only useful so far as it guides action. The key test for this Roadmap is how far it can be made an integral part of policy formation and decision taking by the key European players involved – in Governments, in the power sector and in other crucial industrial sectors and in the individual choices of consumers.

3.4 Political, economic and technological change in the future will require some flexibility in the precise path chosen, but this should not be taken as an excuse for indecision and delay. The Roadmap should build a consensus amongst all key players about the nature and pace of advance needed, and the required expansion in the scale of investment. Particular priority should be given to investments that will improve the security of energy supply in Europe, given the uncertainties about many of the existing sources of energy for Europe in the years ahead.

3.5 The Roadmap should also help to build awareness amongst the general public and consumers about the need for moving to a low carbon economy and the part that everyone will have to play. It is crucial that this should be a ‘Just transition’ that is fair to everyone and helps everyone adjust to the changes that will be needed.

3.6 A number of other countries (including China, the USA, S. Korea etc.) are putting massive effort into the development and deployment of low carbon technologies to acquire technological leadership and competitive advantage in this new industrial growth sector. It is vital that the European Union matches this effort if it is not to fall behind in the highly competitive race for leadership in the field of greener and low carbon technology.

3.7 The existing 20-20-20 targets for expansion of renewable energy and energy efficiency and reduction of carbon emissions to be achieved by 2020 already set a goal for the EU in that year and it is vital that all of these targets be met. The Committee again urges the Council, the Parliament and the Commission to keep under urgent review the case for tightening the 2020 target at least to a 25 % GHG reduction by 2020 based on achieved progress of the COP 17 negotiations and expected Community economic development on the road to the 80 % reduction set for 2050.

3.8 Of course it would be welcome if such a move could be made in conjunction with progress towards general agreement on a new set of targets in the international climate change negotiation process. But absence of such a general agreement should not be taken as a reason for postponing further action on what the EU itself needs to do now in order to meet its own long-term 2020 goal, to improve its own energy security of supply and to maintain its own competitive position in the green technology race.

3.9 The Committee also urges the EU to move quickly to adopt indicative targets for GHG reductions of 40 % by 2030 and 60 % by 2040 so as to provide predictable guidelines for those making investment decisions in the energy sector and other key areas.

3.10 The EUR 270 billion per annum required for new investment is a large figure, but at only 1.5 % of EU GDP it is achievable – provided that the fiscal and other framework signals are positively set and maintained. The Committee strongly endorses the need for stability and predictability in the framework to give adequate assurance for the type of investments that will be needed.

3.11 The Roadmap's targets will require both market pull (i.e. a competitive integrated EU energy market, the necessary grid infrastructure and carbon pricing) and ‘technology push’, (i.e. support for R&D, demonstration and early deployment, as outlined in the SET-Plan (2)). Support for early and widespread deployment of new, breakthrough, low carbon technologies is particularly important to accelerate the learning curve and the rate of take-up. Earlier budget commitments in this area must be maintained.

3.12 Bridge financing is particularly important to ensure that new technologies with high European added value and positive economic rates of return in the long term do not die off at early stages of development. The EU should:

— provide financial support to SET-Plan technologies through tailored combinations of grants and loans,

— bring procurement rules in line with the SET-Plan objectives,

— ensure that the Cohesion and Structural Funds also operate consistently to support low-carbon objectives in infrastructure and other projects.

3.13 The Roadmap places great emphasis on the European Carbon Trading System as a means of bringing about the changes and the investment needed. The ETS was intended to be a global trend-setter and become embedded in an international ‘cap-and-trade’ system that would set a steadily declining global carbon emission cap in line with the 2 °C target. The aim was to establish a global price for trading carbon emissions in a global market which once firmly established might by itself be a major instrument to bring about the necessary shift in investment towards the low carbon technologies of the future. Operating on its own, however, the present European trading system is failing to provide the necessary stimulus to a massive expansion of new greener investment even within Europe.

3.14 The Committee therefore proposes that the Commission should now consider bringing forward a comprehensive new package of measures to bring about the rapid shift in investment priorities that is required. The package should certainly include a reform and strengthening of the ETS (now to be conceived as a European measure rather than as a global precursor) with a particular objective of raising substantial funds to support R&D and deployment of new technology and supporting infrastructure. But it should also include a range of other fiscal, regulatory and consumer-oriented measures.

3.15 A Comprehensive Package

a) A strengthened ETS

The Committee recommends that a wide-ranging review of the ETS should be put in hand. Four areas are particularly important:

— ways need to be found to boost the system's capacity to support innovation and deployment of new low carbon technologies as described in the SET-Plan; using receipts from the auctioning of carbon allowances to support R and D, demonstration and early deployment;

— the potential problem of carbon leakage i.e. relocation of industry (particularly carbon intensive industries) outside the EU must be addressed. Given the failure to realise a global carbon market offsetting border price adjustments may now be justified. In the absence of a global carbon market, the Commission should take further steps to safeguard the competitiveness of enterprises that are actually affected by carbon leakage;

— sector coverage should be reviewed. (In earlier opinions the Committee welcomed the extension of the ETS to the aviation sector and urged further extension to the maritime sector);

— international offset mechanisms to promote cost-efficient emission reductions in developing countries, should be tightened and extended (without offering an excuse to reduce effort to achieve domestic reduction targets).

b) Regulatory Measures. Energy efficiency

Some sectors, such as energy efficiency, are not very sensitive to price signals. Tougher European measures are needed to impose and enforce higher energy efficiency standards for housing and other buildings, cars and other vehicles, consumer products of various kinds. We urge vigorous follow-up of the Energy Efficiency Directive (COM(2011) 109 final) after a thorough impact assessment.

c) Enhancing the role of consumers

Consumers must be motivated to proactively contribute to the creation of a low carbon society via purchasing environmentally-friendly goods and services especially by:

— Improving the credibility of green labelling initiatives and harmonising their standards

— Encouraging the availability of efficient and sustainable consumer products

— Enhancing the EU-wide internal energy market.

Consumers must be convinced of their role in a lower carbon future and cooperative partnerships with the public sector should be encouraged.

d) Infrastructure

Infrastructure to support new low carbon technologies and to ensure interoperability such as new smart power supply grids will need major investment on a Europe-wide basis to ensure consistency of technical specifications and optimal power-sharing. We recommend a follow-up study by the Commission on pathways for European-wide infrastructure development to support the transition to a low carbon economy, and related investment and institutional structures.

e) Capacity building and employment consequences

It is very important that the social impact of expansion and contraction across the sectors affected by the low carbon transition should be analysed and assessed in advance and that comprehensive sectoral tools and measures are put in place to build the necessary skills and capacities and to offer retraining or other assistance to those moving out of the older carbon economy, thus enabling a socially just restructuring.

f) Fiscal measures

Neutral fiscal reforms to increase the level of taxation on carbon fuels (and other natural resources) while encouraging employment and better social security have a crucial part to play in guiding the transition to a low carbon economy. The political climate is probably not yet ripe for reviving the earlier proposal for a Europe-wide carbon tax, but every effort should be made to encourage such reform at national level. The Committee also welcomes the recent proposal for a financial transactions tax and urges that proceeds should be directed towards encouraging investment in the low carbon economy.

4. Comments on specific sectors

4.1 Power sector. The cost of renewables has been coming down steadily over recent years. Investment now needs to be scaled up to bring the cost down to competitive and affordable levels. At the same time sufficient base load needs to be maintained or storage and distribution systems developed to overcome the problems of intermittence of wind and PV power supply.

4.2 Development of the smart grid concept on a European scale is also essential to allow for more extensive integration of renewables. The present capacity of the European power network to absorb intermittent renewables is limited and the system needs to retain adequate base load power supply from non-renewable sources (including nuclear). There will need to be extensive development of smart integrated grid systems (including industrial and domestic sector demand management), and large scale capacity for storing easily accessible power resource (batteries, hydro-storage etc.). If nuclear and fossil fuels with CCS are to be part of the solution, this needs to be addressed openly and resolved, probably on a case-by-case, or, country-by-country basis. We look to the forthcoming Energy 2050 Roadmap to go into these choices in more detail and anticipate greater coordination of energy generation and transmission across Europe.

4.3 Investment in low carbon technologies may mean the acceleration of the rate of investment beyond what the market would judge profitable. This will require public money especially for demonstration and early deployment. Further development of the SET Plan is essential for the low-carbon economy.

4.4 Transport Sector. The Committee supports the communication's perspective on the transition needed in the transport sector. The carbon performance of all existing technologies needs to be optimised. New technologies such as the electrification of road transport need to be promoted, as do 3rd generation biofuels that reduce emissions from existing commercial vehicles and enable fossil-fuel-free HGV transport. Modal shift towards efficient public transport and non-motorised transport needs to be encouraged. The EU and member states need to deploy public expenditure, taxation policies and regulatory means to advance these changes. The EU needs to play a strong co-ordinating and incentivising role, and to set targets and timetables for some of the specific changes needed.

4.5 In relation to cars and other road vehicles emissions standards have been very effective in bringing down emissions. Legally binding emissions standards provide the highest possible certainty to the car industry and its suppliers. In earlier opinions the Committee has commented on the gradually increasing fuel efficiency standards for road vehicles, and urged faster progress on this (3). We repeat those recommendations.

4.6 We note that there are physical limits to how far the efficiency of the internal combustion engine can be taken and suggest that the Commission should now be using the long-term perspective of the low carbon Roadmap and the absolute necessity of reducing emissions from the road vehicle sector to spearhead an accelerated drive towards the development and deployment of zero carbon vehicles using sustainably –produced hydrogen or more cleanly produced electricity.

4.7 The Committee has continuing reservations about the extent of reliance that could or should be placed on the expansion of biofuels and believes the Communication is right to envisage confining the use of biofuels to niches of the transport sector that are difficult to electrify and where they can be used to reduce emissions from the existing vehicle fleet. This also includes efforts to develop more carbon efficient 2nd and 3rd generation biofuels.

4.8 The built environment. Progress in promoting low carbon homes and other buildings has been too slow. There is a very low rate of replacement in the housing sector, so the key challenge in this sector is to identify and implement large scale programmes for improving the energy performance of existing dwellings. The Committee recommends that the Commission should move as quickly as possible to:

— mandate zero carbon standards as soon as being feasible for all new building both public and private, and both for housing and for other building, differentiated for climatic variations;

— mandate quantified targets and programmes for upgrading the energy performance of existing buildings of all kinds so far as is feasible.

4.9 Industry. Here the Roadmap must provide clarity on the policy implications of the proposed trajectory for European industry, given potential impacts on competitiveness and employment. Current targets should be subject to a full assessment focussing on industry sector by sector. For some industrial processes (steel making, cement making etc.) the production of carbon emissions is an intrinsic part of the chemical processes involved so there may be fundamental limits to the amount of GHG reduction that is possible in these sectors unless large-scale substitution of new products or new methods of carbon capture are feasible. As a result the different industrial sectors will each need specific analysis and their own Roadmaps as to how they can reduce their GHG emissions further.

4.10 The Committee seeks clarification from the Commission as to whether a planned analysis and reduction in embedded (or outsourced) carbon is considered to be part of the Roadmap. Worldwide emissions from producing exported goods increased from 4.3Gt (gigatonnes) of CO2 in 1990 (20 % of global emissions) to 7.8Gt of CO2 in 2008 (26 %). Apparent carbon reductions in member states can be negated through the import of products previously manufactured in the EU. Any effective control in this area would involve a combination of border taxes or controls as well as a change in internal consumption patterns – both highly sensitive areas.

4.11 Agriculture and Forestry. The Committee agree that in the forthcoming review of the CAP attention should be paid to promoting energy efficient and low carbon farming practices, building on the 20 % reduction achieved (1990-2006) and that ways of promoting and incentivising land and forestry management to maximise carbon sequestration and retention should be promoted. Support should be provided for farmers who participate in short, locally-based supply chains. This sector offers strong potential for cutting CO2 emissions from fossil fuels and non-renewable materials. However, in the agricultural sector there are clearly conflicting objectives, with on the one hand a need to step up production, and on the other the requirement to capture more carbon dioxide in soils and biomass. The solution to this conflict has yet to be found. In our view, growing international demand for carbon-intensive foodstuffs and wider use of biomass fundamentally contradict the concern with reducing fertiliser use, stepping up carbon sequestration and avoiding the ploughing up of grassland, and the proposed measures do not resolve this contradiction.

4.12 Waste. European waste disposal strategy continues to prioritise reduction of waste arisings, encouragement of reuse or recycling, and minimisation of pollution and land degradation. As well as assessing different methods of disposing of waste we suggest the Commission also focuses on the contribution waste management and treatment can make to a more sustainable and low carbon economy. In particular, the use of waste as a renewable fuel and the recovery of landfill gas (methane) to produce energy should be explored.

Brussels, 22 September 2011. The President of the Economic and Social Committee Staffan NILSSON

(1) EESC Opinions on ‘A resource-efficient Europe – Flagship initiative under the Europe 2020 Strategy’ and on ‘Rio+20: towards the green economy and better governance – The contribution of European organised civil society’ (see page 102 of this official journal).

(2) Strategic Energy Technology Plan. See http://ec.europa.eu/energy/technology/set_plan/set_plan_en.htm.

(3) O.J. C 44 of 16.2.2008; p. 53-56.