EU policy options for climate and energy beyond 2020

EU climate and energy targets beyond 2020 under discussion

In the light of its ambition for 2050, the EU formulated a set of climate and energy targets for 2020. However, there are no legally binding targets for the period after 2020. These are currently subject of discussion. At the request of the Dutch government, PBL Netherlands Environmental Assessment Agency and Ecofys examined possible options for the most cost-effective track towards a low-carbon economy in 2050.

Pricing emissions important but not sufficient

Carbon pricing, by way of the current EU ETS, is a cost-effective and efficient way to reduce greenhouse gas emissions in the short term. A structurally higher CO₂ price, achievable for instance by setting an auction reserve price in combination with a lower ceiling, can serve as a key incentive to low-carbon innovations. But to really boost innovations and energy efficiency, complementary targets and policies are required.

Stimulating renewable energy does not equal stimulating innovation

The targets for renewable energy have to date stimulated the development and cost-price reduction of several important low-carbon technologies. However, not all renewable energy is innovative or sustainable (such as some forms of biofuels or co-firing wood chips in coal power plants).

The target for renewable energy has, for instance, not proven to be a real incentive for more innovative applications of biomass and residues, such as the conversion of woody biomas to biofuels and green gas – a technology crucial to achieve drastic long-term emission reduction. This target can be achieved with cheaper options, including co-firing biomass in coal power plants. In addition, the current sustainability criteria only partly meet the sustainability risks (in the case of biofuels), or do not exist at all (in the case of wood). The main risk is that an increasing demand of biomass will lead to convert current natural ground, which carbon from the original vegetation and soil.

Specific targets for innovative low-carbon technologies would serve as a much better incentive for energy innovation. Such as biomass conversion (other than direct combustion) and carbon capture and storage (CCS).

Standardisation key to realising energy efficiency

Although many energy-efficiency improvements are currently already cost-effective, they are not being made. One of the reasons is that those who carry the costs of these improvements do not themselves benefit from a lower energy bill. Here, too, complementary policies are needed, such as energy standards for buildings or emission performance standards for new passenger cars.

More information

• PBL report Exploration of pathways towards a clean economy by 2050: How to realise a climate-neutral Netherlands
• PBL report Evaluation of policy options to reform the EU Emissions Trading System