IFIEC Energy Forum 2014

“European Industrial Renaissance

requires Competitive Energy”

12 June 2014

Annette Loske

Chairwoman WP Climate Change and Energy Efficiency

Managing Director German Federation of Industrial

Energy Consumers (VIK) 1

2

EU Climate and Energy package 2020 to 2030

3. Energy Prices and

Costs in Europe

2. European

Industrial

Renaissance

1. Framework for

Energy and Climate

from 2020 to 2030

4. Shale Gas,

Market Stability

Reserve for ETS 2020 to 2030

3

1. Framework for Energy and Climate from 2020 to

2030: EC proposals

– Binding CO2-reduction target until 2030: - 40 %

(compared to 1990)

- 43 % in ETS-sectors (compared to 2005)

- 30 % in non-ETS-sectors (compared to 2005)

– Binding 27 % renewable energy target in primary

energy consumption by 2030

no binding national targets

At least 45 % renewables in electricity consumption

Revision of renewable energy directive expected

– Energy Efficiency target for 2030: EC proposal

expected in autumn 2014

4

- 43 % CO2 reduction target for ETS sectors:

Impact on ETS cap

Source: VIK graphic, EC numbers

0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

2.000

2.200

2010 2020 2030 2040 2050 2060 2070

CO

2-C

ap [

Mio

. t C

O2)

Entwicklung des CO2-Cap abhängig vom linearen Reduktionsfaktor (LRF)

LRF 1,74%

LRF 2,20%

2030:

Cap = 1.333 Mio. t CO2

2058:

Cap = 0

5

- 43 % CO2 reduction target for ETS sectors:

Impact on ETS cap (II)

Source: VIK graphic, EC numbers

767 809

705

517

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500

1.000

1.500

2.000

2.500

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Mio

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1. TP 2. TP 3. Trading period 4. Trading period

2 084

1 816

1333

2083

free allocation

6

2. European Industrial Renaissance

“A strong dynamic industrial base is indispensable for a

strong European economy”

M Barroso, 2013, State of the Union Adress

Aim: Increase industry contribution to GDP to 20% by 2020

1. Increase of productivity, resource and energy efficiency

necessary

2. Completion of internal market (for energy by 2014)

3. Mainstreaming industry-related competitiveness

concerns across all policy areas

4. Energy must be available at competitive prices

7

Strong support from companies all over EU

3. IFIEC request: Streamline 2030 strategy towards

growth and jobs

8

3. IFIEC request: Streamline 2030 strategy

towards growth and jobs (II)

Climate objectives must be set in a

way to keep a high performing

industry in Europe

Enabling the EU manufacturing

industry to grow will reduce global

GHG emissions

The precondition: An EU Climate

Change Policy without Carbon

Leakage

9

3. IFIEC request: An EU Climate Change Policy

without Carbon Leakage

Carbon Leakage – today

The problem: investment leakage (the longer term perspective)

Only little production carbon leakage because sufficient protection at

low carbon prices (the short term perspective)

Carbon Leakage – in future

The problem: investment and production carbon leakage if no

globally aligned binding action and burden after 2020 because

• EU reduction target leads to extreme shortage of allowances:

without breakthrough technologies not enough allowances to

continue industrial activity in the EU

• High carbon prices in the medium- (in case of market intervention)

or long-term

The existing approaches to avoid carbon leakage will not

work under these circumstances

10

Medium term strategy

A „dynamic ETS“:

Realistic benchmark (technologically feasible)

No reduction factors

Allocation based on actual production

A new (industry) reserve to balance the difference between

forecasted and actual production

Complete and stable compensation of indirect costs (indirect

allocation)

3. IFIEC request: New approach to Carbon

Leakage needed - „just go on“not an option

Minimises carbon leakage better than current system But only to a certain point in time /

a certain carbon price level

11

Long term strategy

High EU reduction targets as planned only with globally aligned

binding action/burden

3. IFIEC request: New concepts necessary after

2020 if no globally comparable effort achieved

Request to EU politicians:

Make a clear commitment for a

climate policy strategy review after

2020

No unconditional target setting

Thank you