Recently, fossil fuel companies have used the ECT to sue the Slovenian government over environmental protections and challenge the Dutch government‘s coal phaseout plan. The firms have argued that green government policies unfairly damage the value of their assets.

Similar cases could cost taxpayers across the world up to €1.3 trillion ($1.5tn) by 2050, according to the Open Exp think tank, based on the value of fossil fuel assets protected by the treaty. Just under half of these costs would fall on the EU.

The EU has been pushing for green reform of the treaty but all 53 ECT countries need to be on board for changes to be made and Japan and Central Asian countries have blocked reforms.

Speaking on Monday, the European Commissioner for energy Kadri Simon said that “greening” was “at the heart of the [ECT] modernisation process”.

A leaked European Comission proposal for ECT reform proposes removing coal, oil and gas from the energy investments protected by the treaty. If approved, this rule change would come into force in ten years time and investments made in the meantime would not be protected.

Environmental campaigners said the Commission’s proposal was too slow and had too many loopholes, particularly on gas. Paul de Clerck, from Friends of the Earth Europe accused the EC of “blind pandering to fossil fuel interests” by “protect[ing] fossil fuels for at least another ten years”.

The EC’s proposal says that investments in gas made before 2030 should be protected if they emit less than a certain amount of CO2 and if their plants and infrastructure enable the use of low-carbon and renewable gases. The EC adds that investments in coal-to-gas conversions or gas pipelines which can carry low-carbon and renewable gases should be protected until 2040.

Poland’s largest utility announces pivot from coal to renewables

The document also proposes that investments in hydrogen and materials used to insulate buildings should be protected. Hydrogen can be renewable or non-renewable depending on how it is produced.

Amandine Van Den Berghe, trade and environment lawyer at ClientEarth said the Commision’s proposal was “a step in the right direction but contains major loopholes around gas and non-renewable hydrogen, which increase the risk of locking in gas infrastructure and more future emissions”.

Yamina Saheb used to be the head of the ECT energy efficiency unit and now monitors negotiations. She said that on Thursday, the document will be discussed by the European Council’s energy working party, which is made up of representatives of the EU’s member states.

Peru and Switzerland sign ‘world first’ carbon offset deal under Paris Agreement

Saheb said that the proposal was submitted too late to be discussed at next week’s ECT negotiations and so won’t be discussed at all this year. The next round of negotiations is scheduled for February or March 2021. Saheb said that although the EC’s proposal is “weak from a climate perspective”, the other ECT member states will still reject it.

Saheb and De Klerk argue that, instead of pushing for reform, the EU should leave the ECT. States like Luxembourg and France have said the EU should consider leaving and Italy and Russia have already left.

The treaty’s ‘sunset clause’ means that, even if the EU states left, the ECT’s rules still apply for 20 years. Commenting on whether this made reform better than leaving, Saheb said that 80% of energy investments in the EU are from fellow EU or EFTA countries so, when they leave, these countries could also agree to end the sunset clause between themselves. They should then plan carefully so as to avoid legal cases over the 20% of investments from outside of Europe, she said.

This article was amended to say that Italy and Russia have left the ECT. Previously, it said they had started the process of leaving.

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EU Commission president Ursula von der Leyen has presented a carbon border tax as an important tool “to ensure that EU companies can compete on a level playing field” with big emitters such as China and the USA. This week von der Leyen announced that the EU would raise its emissions reduction target to at least 55% compared to 1990 levels – up from 40% currently – by 2030. 

The main reason for introducing a carbon border tax is to prevent carbon-intensive production from relocating to countries with lower emissions standards, a problem known as “carbon leakage.”

IMF president Kristalina Georgieva on Wednesday called on major emitters to cooperate and draw up a carbon pricing agreement. “The EU cannot stop global warming on its own. But it can bring the world together. A top priority should be an agreement on a carbon pricing floor among major emitting countries,” Georgieva said in a statement. 

Georgieva said that in the absence of such an agreement, applying the same carbon price on the same products, irrespective of where they are produced, could help avoid carbon leakage and ensure fairness towards European businesses.

An EU climate mitigation policy published by the fund elaborated on the position: “A carbon border adjustment mechanism could complement the package to avoid an increase in emissions outside the EU due to higher carbon prices in the EU.”

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Susanne Droege, senior fellow at the German Institute for International and Security Affairs, told Climate Home it was significant the IMF had publicly endorsed the EU’s plan to introduce a mechanism to avoid carbon leakage at the bloc’s border. “Carbon border tax is a potential option on how to implement that mechanism,” she said.

Harro van Asselt, professor of climate law and policy at the University of Eastern Finland, said several options remain open for how that carbon price could be applied.

“What seems most likely is that it will be in the form of a charge similar to the EU emissions trading system (ETS) allowance price for a limited set of sectors, for example cement and electricity, with importers being required to draw from a separate pool of allowances,” he said. 

Comment: How von der Leyen could make a carbon border tax work

Russia’s economic development minister said in July that an EU carbon border tax would contravene World Trade Organisation (WTO) rules. China and the US have also clearly stated their opposition and asked the WTO to make the EU clarify its plans, according to Droege.

It is critical that the bloc’s efforts to design the policy go hand-in-hand with diplomatic efforts to reassure major trade partners. “Otherwise there is the real risk of retaliation,” said van Asselt. The EU learned the hard way when it tried to impose the ETS on international aviation in 2012 and was forced to limit the scope to intra-EU flights only following strong international and industry backlash. 

Joe Biden has said that if he is elected US president in November, he may introduce a US carbon border tax “on carbon-intensive goods from countries that are failing to meet their climate and environmental obligations.”

The post IMF endorses EU plan to put a carbon price on imports appeared first on Climate Home News.

At a hydrogen summit this week, finance minister Bruno Le Maire unveiled his vision for clean hydrogen and emphasised that he hopes to partner with Germany on this.

“I hope that we will manage to find a joint Franco-German and then a European project for hydrogen,” Le Maire told French media outlet CNews ahead of the meeting in Berlin.

This week Le Maire revealed that almost a third of France’s €100 billion ($119bn) coronavirus recovery package will be spent on green energy policies, with €7 billion going towards the development of carbon-free hydrogen for transport and the industrial sector by 2030. 

Germany unveiled its national hydrogen strategy in June. The country has earmarked €9 billion for the expansion of hydrogen production as part of a €130 billion economic stimulus package, with the aim of ramping up its capacity to 5 GW by 2030 and 10 GW by 2040.

Carbon-free hydrogen is produced by electrolysis. Electricity from renewable sources or nuclear is used to split water into hydrogen and oxygen. It is expected to play a pivotal role in the global transition to net zero emissions, particularly as a solution to decarbonise the steel and shipping industries, the International Energy Agency (IEA) said in a report published on Thursday. 

Ministers promise green recovery at Japanese virtual summit, keep quiet on fossil bailouts

France aims to install 6.5 GW of clean hydrogen production capacity by 2030 and start building electrolyser factories in 2021, the government said.

The government has said its investment in carbon-free hydrogen will cut France’s CO2 output by 6 million tonnes, the equivalent of Paris’ annual emissions.

“France is convinced that carbon-free hydrogen will be one of the great revolutions of our century: for the decarbonisation of the industrial sector, to develop and deploy emission-free mobility solutions, to store energy and provide additional responses to the intermittency of renewable energies,” Le Maire said in France’s hydrogen strategy.

Nicola De Blasio, a senior fellow in energy technology innovation at the Harvard Kennedy School, told Climate Home News it would take more than two countries to build a functioning European hydrogen market.

“You need to create a demand, you need to build the infrastructure… this will require coordination at the EU level,” De Blasio said. 

Fracking company sues Slovenia over ‘unreasonable’ environmental protections

A global race to ramp up production of the clean fuel has begun with the EU Commission unveiling its hydrogen strategy in July, which aims to increase capacity to 40 GW and generate 10 million tonnes of clean hydrogen by 2030.

The EU estimates that by 2050 clean hydrogen could meet 24% of the world’s energy demand. But it is a long road ahead. Today 96% of hydrogen supply comes from fossil fuels, according to a report by the Rocky Mountain Institute. Hydrogen from fossil fuels generates more than 800 Mt of CO2, comparable to the emissions of the UK and Indonesia combined, according to the IEA. 

EU Commission Vice President Frans Timmermans, who presides over the European Green New Deal, has championed hydrogen as a renewable fuel that can easily be integrated into existing energy infrastructure, as opposed to wind and solar which require the construction of new farms and grids. 

“There are millions of kilometres of natural gas pipeline, and a significant fraction is completely compatible with hydrogen use,” José Miguel Bermúdez Menéndez, an energy technology analyst at the IEA, told Climate Home News. 

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While Germany plans to generate hydrogen from renewable sources, such as offshore wind and hydropower, France is a major proponent of nuclear power, which makes up over 70% of the country’s energy mix. In an interview with French media BFM TV, Le Maire described himself as a “nuclear advocate.” When asked whether France would generate clean hydrogen using nuclear, Le Maire said the fuel remains relevant.

Germany plans to close all its nuclear power plants by 2022, following mass public support for their closure amid safety concerns. 

This should not hinder EU-wide collaboration on hydrogen, said De Blasio, citing Italy as an example. Italy closed its nuclear plants decades ago but continues to import electricity from nuclear. “How many consumers know where their electricity comes from?” De Blasio said.

The EU could meet most of its hydrogen demand internally, but the bloc must move fast to compete internationally, De Blasio added, noting that China has started to look into hydrogen. 

During his interview with CNews, De Maire warned that the EU should not make the “same mistakes” as it did with solar panels by allowing China to dominate the manufacturing side. 

“If China is going to put its industrial might behind hydrogen, like it did with electric vehicles and solar panels, we could have a similar situation,” De Blasio said.

The post France seeks German collaboration on hydrogen in EU green recovery appeared first on Climate Home News.

(Flickr/ Nofrills)

By Alex Pashley

Serbia’s carbon-cutting pledge has been welcomed by the European Commission as an “exemplary” step to joining the EU, despite official data revealing it to mean a 15% hike in emissions by 2030.

The plans to cut emissions by 9.8% by 2030 on 1990 levels was announced on Thursday at a press conference in Belgrade, with the commission’s vice-president for energy union, Maros Sefcovic, the Guardian reported.

Though the country’s emissions are already a quarter lower since 1990, after the collapse of heavy industry with the fall of communism, according to a government report sent to the UN’s climate change body in April.

“Emissions of greenhouse gases in 2013 decreased by 3.5% compared to 2010, and 25.1% in relation to 1990,” the paper says. A 9.8% cut in emissions would thus allow a 15.3% rise.

Sefcovic praised Serbia’s offer nonetheless, saying: “Your success today in adopting Serbia’s INDC is an exemplary step on this path [to EU accession].”

But others ridiculed the commission for endorsing the flawed climate policy of the candidate country.

“The Serbian offer is a joke, but no one’s laughing now that the commission says it is an exemplary step on the path to EU membership,” said Garret Tankosić-Kelly, the director of SEEChange, a Bosnian thinktank, focused on sustainable development in the Balkans.

A source at the commission told the Guardian: “This is kind of a fiddle,” one said. “It is actually a very poor announcement and by making it, Serbia is free-riding on the back of countries that are prepared to be much more ambitious.”

It adds scrutiny on a UN agreement to have a robust mechanism to review country’s climate policies and ensure they are credible in curbing global warming.

Australia “systematically overstated” its emissions to ease climate targets, energy analysts charged this week.

The post Serbia accused of fiddling UN climate change pledge appeared first on Climate Home News.

Pic: European Parliament/Flickr

By Megan Darby

European leaders have directed officials to come up with an energy efficiency target for 2030, prompted by ongoing tensions between Russia and Ukraine.

The conflict over one of Europe’s key gas supply routes has given fresh impetus to the drive to cut energy consumption and dependence on imported fuels.

The European Commission is considering an energy saving target of between 27% and 35% by 2030, with the final proposals due out later this month. There are reportedly internal divisions over the level of ambition to recommend.

The leaders of European member states stressed the importance of energy efficiency at a European Council meeting last Friday.

A note on the conclusions of the talks stated: “Geopolitical events, the worldwide energy competition and the impact of climate change are triggering a rethink of our energy and climate strategy. We must avoid Europe relying to such a high extent on fuel and gas imports.

“To ensure our energy future is under full control, we want to build an Energy Union aiming at affordable, secure and sustainable energy. Energy efficiency is essential, since the cheapest and cleanest energy is that which is not consumed.”

Internal divisions

Despite the endorsement from national leaders, some parties are reluctant to commit to an ambitious target as this could undermine the role of carbon pricing.

Sources close to the matter say climate commissioner Connie Hedegaard is pushing to cut energy consumption by 30% to 35% compared to business as usual projections.

These two options are included in a draft proposal seen by RTCC, although commission president Jose Manuel Barroso is arguing for a 27% target.

According to the draft proposal, the 30% option would maintain the momentum from this decade’s drive for a 20% energy efficiency saving.

ANALYSIS: Why the EU’s climate targets matter beyond Brussels

The bloc is presently on track to deliver 18% to 19% by 2020, but officials say in the draft document: “After years of hesitation, Europe’s energy efficiency policy is starting to deliver.”

An alternative wording recommended increasing the rate of effort, “taking into account the increased importance of energy efficiency in the context of the European Energy Security Strategy, and the important role that energy efficiency can play in promoting growth and jobs”. That line was dropped from a later draft.

The 27% figure, meanwhile, is closer to the indicative level in the 2030 climate and energy framework documents published in January.

That package targeted a 40% cut in greenhouse gas emissions and a 27% share of renewables in the energy mix. It did not specify an energy efficiency target but suggested that the most cost-efficient level of savings was 25%.

Carbon price trade-off

One reason given for aiming lower on energy efficiency is that a high target would undermine the carbon price set by the emissions trading system (ETS).

There are separate measures under development to make the ETS more effective. A proposed market stability reserve would withhold pollution permits from the market at times of surplus, boosting the price.

The carbon market was intended to reduce emissions as efficiently as possible. Yet the price of allowances is chronically low, at around €5, making it a weak signal for low carbon investment. Advocates of the ETS blame the industry-specific renewables and energy efficiency targets for undermining the market.

Brook Riley, director of EU climate policy for Friends of the Earth, acknowledged the trade-off, but said energy savings and renewables should not be sacrificed to focus on the ETS.

“Why not do the smart thing and go for a higher greenhouse gas target which would require all the policy options to pull their weight?” he said.

The post Brussels divided on 2030 energy saving target appeared first on Climate Home News.

Source: Flickr/Never House

By Sophie Yeo

An alliance of over 1,000 cities has called on the European Council to strengthen an EU proposal to reduce Europe’s carbon emissions 40% by 2030.

The group Energy Cities wrote to Herman Van Rompuy, the president of the Council, asking him to ensure a strong package of measures to help decarbonise Europe.

They say proposals put forward by the European Commission in January are too weak, as they exclude an energy efficiency target, and set a Europe-wide renewables target of 27%.

Instead, they want the Council to support a package more aligned to the European Parliament’s amendments proposed earlier this month for a 40% emissions reduction target, along with a 30% target for both efficiency and renewable energy.

Before the proposals can begin the process of becoming legislation, they must be approved by the European Council at a meeting taking place in March.

The cities say it is now up to the Council to “send an encouraging signal to investors and among them citizens, communities and local authorities, and confirm the EU’s ambition to take a leading role in international climate talks and programmes.”

The Council’s decision is deemed important, as it will define the EU’s main climate pledge for a global emissions reduction agreement, set to be agreed in Paris at the end of next year.

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National Grid gas successfully completed a test drilling on a North Sea storage site for CO2. (Source: National Grid)

By Nilima Choudhury

Drilling for a carbon dioxide storage site in the North Sea has been completed by British energy company National Grid.

The drilling is a major milestone in its programme, funded by an EU grant, to advance Carbon Capture and Storage (CCS) in Europe. The findings are significant as this type of storage site is common in Europe.

“This is the first time in the UK that we’ve done test drilling specifically for carbon dioxide and it looks as though it’s been successful and we’re going to have what will be a large site in the North Sea for being able to store carbon dioxide,” Isobel Rowley, a National Grid spokesperson, told RTCC.

Early indications are that the undersea site 65 kilometres off the Yorkshire coast is viable for carbon dioxide storage and will be able to hold around 200 million tonnes permanently. This is equivalent to taking ten million cars off the road for 10 years.

Peter Boreham, National Grid’s director of European Business Development said: “Global energy demand is likely to double in the next twenty years and CCS is the only technology that can turn high carbon fuels into genuinely low carbon electricity and keep costs low for consumers”.

Luke Warren, deputy chief executive of trade group the Carbon Capture and Storage Association acknowledged to RTCC the importance of this step for CCS in Europe.

Warren is now calling for reform to the “electricity market so we can encourage greater private sector investment into CCS.

“We’re in a fairly good place here in the UK. The government has £1 billion of funds [for] projects. If we get [the electricity market reform] right, that will put in place the market arrangements that will hopefully enable CCS be deployed at scale, which is what is needed if we’re going to reduce fossil fuels.”

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