Documents considered by the Committee on 5 April 2011 - European Scrutiny Committee Contents

8   Towards a low carbon economy in 2050


+ ADDs 1-3

COM(11) 112

Commission Communication: A Roadmap for moving to a competitive low carbon economy in 2050

Legal base
Document originated8 March 2011
Deposited in Parliament16 March 2011
DepartmentEnergy & Climate Change
Basis of considerationEM of 28 March 2011
Previous Committee ReportNone, but see footnotes
To be discussed in CouncilJune 2011
Committee's assessmentPolitically important
Committee's decisionCleared


8.1  According to the Commission, one of the five headline targets in the Europe 2020 Strategy relates to climate and energy, where Member States have committed themselves to reducing greenhouse gas emissions by 20%, increasing the share of renewable in the EU's energy mix to 20%, and achieving a 20% energy efficiency target. It notes that the EU is currently on track to meet the first two of these targets, but that the Energy Efficiency Plan[24] put forward by the Commission recently has pointed out that the target in that area will not be met unless further efforts are made. The Commission also notes that, in order to keep the global temperature increase below 2°C, the European Council has endorsed the objective of reducing greenhouse gas emissions in 2050 by 80-95% compared with 1990, and it says that, together with the Energy Efficiency Plan and the proposed White Paper on Transport, this Communication sets out a means whereby such an objective could be met, outlining milestones which would show whether the EU is on course to reach the target, as well as the policy challenges, investment needs, and opportunities in different sectors.

The current document

8.2  The Commission says that the transition to a competitive low carbon economy requires the EU to prepare for reductions of 80% in its domestic[25] emissions by 2050, and that the cost-effective pathway would be to achieve reductions of 25% by 2020, and of about 40% and 60% by 2030 and 2040 respectively. It adds that this implies annual reductions of roughly 1% in the first decade to 2020, 1.5% in the second decade until 2030, and 2% in the two decades to 2050, with the effort becoming greater over time as a wider set of cost-effective technologies becomes available. However, it points out that, on the basis of current policies, the EU would only secure reductions of 20% in 2020 and 30% in 2030, and that it will therefore be necessary to implement both the Energy Efficiency Plan and the measures set out in the current Communication. It also observes that a less ambitious pathway would lock in carbon intensive investments, resulting in higher carbon prices later on, and significantly higher overall costs over the entire period, and that research and development, the early deployment of technologies such as carbon capture and storage, smart grids, and hybrid and electric vehicle technology, are of paramount importance, as is full implementation of the Strategic Energy Technology Plan,[26] involving additional investment of €50 billion over the next 10 years. In addition, it points out that auctioning revenue and the cohesion policy are financing options which Member States should exploit, together with increased resource efficiency through waste recycling, better waste management and behavioural change.


8.3  The Commission says that it has explored pathways for key sectors, assuming different rates of technological innovation and fossil fuel prices with the following results:
Emission reductions compared with 1990
-54 to -68%
-93 to -99%
-34 to -40%
-83 to -87%
+20 to -9%
-54 to -67%
Residential and services
-37 to -53%
-88 to -91%
-36 to -37%
-42 to -49%
Other non-carbon dioxide emissions
-72 to -73%
-70 to -78%
-40 to -44%
-79 to -82%

It then looks in greater depth at the various sectoral options.


8.4  The Commission suggests that electricity will play a central role in the low carbon economy, and that it would be possible by 2050 to almost completely eliminate carbon dioxide emissions, and partially replace fossil fuels in transport and heating. It says that a wide range of existing technologies will need to be deployed, including some (such as photovoltaics) which will continue to become cheaper, and thus more competitive, over time. It also says that energy specific scenarios and the means of achieving decarbonisation, will be examined further in the Energy 2050 Roadmap, building on established EU energy policy and the EU 2020 Strategy.

8.5  The Commission suggests that the role of the Emissions Trading Scheme will be critical in driving a wide range of low carbon technologies onto the market, provided there is both a sufficient carbon price signal and long-term predictability. It also believes that the agreed linear reduction in the emissions cap under the Scheme may need to be revisited, and that other measures, such as energy taxation and technological support, could have a part to play. However, it points out that, as the central role of electricity in the low carbon economy requires significant use of renewable energy, considerable investments in networks are required to ensure continuity of supply, but that, as the benefits do not always accrue to the grid operator, as opposed to society at large, consideration has to be given to how the policy framework can foster these investments.

Sustainable mobility through fuel efficiency

8.6  The Commission says that a more efficient and sustainable European transport system can be achieved by technological innovation in three areas — namely vehicle efficiency, new fuels and propulsion systems, and information and communication systems — and that the White Paper on Transport will provide a comprehensive set of measures to increase sustainability. It suggests that, up to 2025, the main driver will be improved fuel efficiency, and that emissions from road, rail and inland waterways could by 2030 be brought back to below 1990 levels, in combination with pricing schemes to tackle congestion and air pollution, infrastructure charging, intelligent city planning and improved public transport. It also believes that improved efficiency and better demand-side management, fostered through carbon dioxide standards and smart taxation systems, should advance the development of hybrid engine technologies.

8.7  The Commission goes on to suggest that synergies with other sustainability objectives, such as a reduction of oil dependence, the competitiveness of European's car industry, as well as health benefits, make a compelling case for accelerating the early development of electrification and of alternative fuels and propulsion systems, noting also the increased investment in battery technology, electric vehicles and fuel cells in countries such as the US, Japan, Korea and China. In addition, the Commission observes that sustainable biofuels could be used in aviation and heavy duty trucks, but would in any case need to play a greater part if electrification were not deployed on a large scale (which would then decrease their net greenhouse gas benefits, and increase pressure on biodiversity, water management and the environment in general).

The built environment

8.8  The Commission says that the built environment provides low-cost and short-term opportunities to reduce emissions, principally though improved energy performance of buildings, where it suggests that emissions by 2050 could be reduced by around 90%. It therefore highlights the importance of achieving the objective in Directive 2010/31/EU that new buildings from 2021 should be nearly zero-energy, and the European Council's decision that from 2012 all Member States should include energy efficiency procurement standards for relevant public buildings and services. It adds that it will present by the end of 2011 a Communication on sustainable construction.

8.9  The Commission says that, while the extra cost of designing new low- or zero-energy buildings can be recovered though fuel savings, the refurbishment of the existing building stock presents a greater challenge, particularly as regards the financing of the necessary investments. It notes that some Member States are already using structural funds, and that, as an investment of up to €200 billion will be needed over the next decade in building components and equipment, Member States are implementing financing schemes, such as preferential interest rates for leveraging private sector investments. It also believes that, as in the transport sector, shifting energy consumption towards low carbon electricity and renewable energy, provided through district heating systems, would help to protect consumers against rising fossil fuel prices and bring significant health benefits.

Industrial sectors (including energy intensive industries)

8.10  The Commission suggests that greenhouse gas emissions from the industrial sector could be reduced by 83 to 87% in 2050 through the application of more advanced resource and energy efficient processes, increased recycling, as well as abatement technologies for non-carbon dioxide emissions, but adds that, as solutions are sector-specific, it will develop specific Roadmaps in cooperation with those concerned. It also points out that carbon capture and storage would need to deployed on a broad scale after 2035, entailing an investment of more than €10 billion, adding that, if the EU's main competitors did not pursue a similar course, it would be necessary to address the risks of carbon leakage.[27] The Commission observes that, as the EU develops its climate policy framework, it will be necessary to continue to monitor the impacts of measures on the competitiveness of the industries affected in relation to third countries, though it believes that current measures provide adequate safeguards for the time being.

Sustainable land use productivity

8.11  The Commission suggests that, although the agricultural sector has already achieved a significant reduction in non-carbon dioxide emissions, it can by 2050 reduce these further by between 42 and 49% compared with 1990. It says that agricultural policy should focus on sustainable efficiency gains, efficient fertiliser use, bio-gasification of organic manure, better fodder, local diversification and commercialisation of production, as well as maximising the benefits of extensive farming. It also notes that improved practices can increase the sector's capacity to preserve and sequester carbon in soils and forests, through targeted measures to maintain grasslands, restore wetlands and peat lands, low- or zero-tillage, and reduce erosion, and that it can also increasingly provide resources for bio-energy and industrial feedstocks. It says that these issues will be addressed further in its legislative proposals for the Common Agricultural Policy for 2013.

8.12  The Commission goes on to suggest that the rate of emissions reductions in the sector could slow down after 2030, in part because of increased production in response to the growing global population, and it points out that by 2050 agriculture is projected to represent a third of total EU emissions, tripling its share compared with today, thereby increasing its importance in terms of climate policy. At the same time, the Commission highlights the challenges arising from increased global population, alongside the need to preserve tropical forests, and increased demand for bio-energy, animal feed, timber, and bio-industries. It says that this will require sustainable productivity increases on a global scale, whilst cautioning that the impact on water, soil and biodiversity will need careful management.


Capital investment

8.13  The Commission says that the various sources of low carbon energy are key components which will require a major and sustained increase in public and private investment over the next 40 years of around €270 billion a year, equivalent to about 1.5% of EU GDP (on top of current investment of about 19% of GDP). It notes that this would restore investment levels to those before the economic crisis, and will determine the future competitiveness of economies, pointing out (for example) that investment in China accounts for 48% of GDP. The Commission regards the unlocking of the investment potential of the private sector as a major challenge, adding that, whilst most of the additional investment would be paid back over time through lower energy bills and increased productivity, markets tend to discount future benefits and disregard long-term risks, the key question therefore being to create a policy framework for such investments. It adds that additional public private financing mechanisms are key in order to overcome initial risks and cash flow barriers, suggesting that public finance through instruments such as revolving funds, preferential interest rates, guarantee schemes, risk-sharing facilities can mobilise and steer the required private finance. It also believes that the European Investment Bank, the European Bank for Reconstruction and Development, as well as dedicated funding in the next Multi-Annual Financial Framework, should play a role, and it points out that increased domestic investment helps to increase productivity and the creation of future growth and jobs.

Reducing energy costs and dependence of fossil fuel imports

8.14  The Commission suggests that, over the whole 40 year period, energy efficiency and a switch to domestically produced low carbon energy sources will reduce the EU's average fuel costs by between €175 billion and €320 billion a year, depending upon the extent and nature of the global action undertaken on climate change. It also observes that the EU's primary energy consumption in 2050 could be about 30% below 2005 levels, with more domestic energy, particularly renewables, being used, and a halving of imports of oil and gas: on the other hand, it thinks that, without action, the oil and gas import bill could instead double — a difference of about €400 billion a year, equivalent to 3% of today's GDP.


8.15  The Commission believes that investing early in the low carbon economy would stimulate structural change and create in net terms new jobs in both the short and medium term, pointing out that renewable energy has a strong record in this respect, and that the construction sector offers large short-term opportunities, having been particularly hard hit by the economic crisis. It says that, as industry takes advantage of the economic opportunities provided by the low carbon economy, the need for a skilled work force will become more pressing, and that it is currently assessing the employment effects of greening the economy.

Improved air quality and health

8.16  The Commission says that action to reduce greenhouse gas emissions would complement existing and planned air quality measures, with the electrification of transport and an expansion of public transport capable of making a striking contribution in European cities. It suggests that the combined effect of greenhouse gas reductions and air quality measures would lower air pollution levels in 2030 by 65% as compared with 2005, and that the annual costs of controlling traditional air pollution could be more than €10 billion lower (rising to €50 billion in 2050). It adds that mortality would be reduced and public health improved, and that there would be less damage to ecosystems, crops, materials and buildings.


8.17  The Commission points out that the EU accounts for little more than 10% of global emissions, and thus will not be able to tackle climate change on its own. It says that it must therefore continue to engage its partners, and that by formulating and implementing ambitious domestic climate change policies, it has brought many other countries on board. In particular, it notes that, whilst the EU unilaterally adopted its climate and energy package at the end of 2008, countries representing more than 80% of global emissions have pledged domestic targets under the Copenhagen Accord and the Cancun agreement (though it cautions that, for some of these, delivering those pledges will require stronger action than currently envisaged). It adds that implementing these pledges in the coming years will be key step in globalising climate change policies, and that the EU should use this opportunity to strengthen its international cooperation, including the gradual development of global carbon markets. However, the Commission warns that swift implementation of the pledges made since Copenhagen would achieve only part of the reductions needed, in that their full implementation would reach 60% of the emission reductions required until 2020.

The Government's view

8.18  In his Explanatory Memorandum of 28 March 2011, the Minister of State at the Department for Energy & Climate Change (Gregory Barker) says that the UK agrees with the main conclusion of the Roadmap that the EU should increase its domestic reduction target to at least 25% by 2020, and that the Roadmap provides further evidence that a 20% target is not a cost effective overall target. He adds that policies will need to be put into place to deliver the cost effective trajectory set out in the Roadmap, with Member States doing more to meet their efficiency commitments, and to set aside (and then cancel) a quantity of auction allowances in the next phase of the Emissions Trading Scheme. The UK also believes it is important for the Scheme's cap to be tightened, and is examining how this can be achieved.

8.19  The Minister believes that the Roadmap supports the Government's commitment to push for an agreed increase in the EU emissions reduction target to 30% by 2020, noting that, once existing rights within the EU to purchase offset credits are taken into account, there would then need to be a target of around 30% in order to deliver the 2020 milestone of 25% domestic reductions required to put the EU on track for a cost-effective trajectory to 2050. He also welcomes the Commission's explicit statement that a move to an EU 30% target remains on the table in the right conditions.

8.20  The Minister says that the response from other Member States, industry and non-governmental organisations to the Roadmap has been broadly positive, with no Member State having spoken out against its findings of Roadmap, and six Environment Ministers[28] having joined the UK in signing a letter in support of the Roadmap endorsing a move to a 30% target. He concludes by saying that the UK will now be pressing for an informed debate on the practical steps needed to take forward the findings of the Roadmap.


8.21  Insofar as this Communication deals with a topic of obvious environmental, economic and political interest, it is clearly right to draw it to the attention of the House, given also the breadth of the issues it addresses, the very long timescale considered, and the level of ambition behind the various measures identified.

8.22  In view of this, we have considered carefully whether to recommend the document for debate, but, notwithstanding the importance of the issues involved, we have on balance decided against doing so, for two reasons. First, as with many comparable Communications put forward by the Commission recently, the wide scope of the document means that is it likely to give rise to a very general and somewhat unfocussed debate, and we think it would be preferable if individual aspects were to be considered as and when the Commission puts forward more specific thoughts. Secondly, there is inevitably a substantial overlap between this document and that on the Energy 2020 Strategy,[29] which was debated in European Committee A as recently as 2 February 2011, and we are doubtful as to the value of another energy-related debate at this stage.

8.23  We are therefore clearing the document.

24   (32584) 7363/11: see chapter 7 of this Report. Back

25   In other words, real internal reductions, with no offsetting through the carbon market. Back

26   (30998) 14230/09 + ADDs 1-4: see HC 19-xxx (2008-09), chapter 3 (4 November 2009). Back

27   This occurs when there is an increase in carbon emissions in one country or region as an indirect and unintended consequence of emission reduction measures in another country or region - for example, as a result of the relocation of greenhouse gas emitting installations away from countries/regions where emissions are penalised. Back

28   Denmark, Germany, Greece, Portugal, Spain, Sweden. Back

29   (32170) 16096/10: see HC 428-xi (2010-11), chapter 2 (15 December 2010). Back

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