The Energy Union package and agriculture

Last Wednesday 25th February the Commission launched its long-awaited Energy Union package comprising three Communications. The first proposes A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy with an accompanying roadmap setting out a projected schedule for the implementing legislation. This document sets out priorities for energy and climate policy, with a particular focus on achieving an integrated energy market, ensuring security of supply including through diversification, improving infrastructure and interconnection, improving energy efficiency, and speeding up decarbonisation in order to meet the EU’s climate goals. In total, it sets out 15 action areas to be addressed in implementing these objectives.

A second Communication prepares the EU’s contribution to the forthcoming United Nations Framework Convention on Climate Change (UNFCCC) Paris Summit in December where it is hoped to reach agreement on a legally binding agreement intended to ensure that the world is on track to achieve the below 2°C objective. A third communication sets out the proposed steps to achieve a 10% electricity interconnection target. Those looking for a brief overview will find a good summary in this article from the ICTSD Bridges Weekly newsletter.

As regards the climate policy objectives in these documents, the Energy Union package builds on the conclusions of the European Council last October. EU leaders committed at that time to the goal of cutting greenhouse gas emissions by 40% by 2030 compared to 1990 including a pledge to bring farming, forestry and land use under the same target before 2020 once technical rules have been established. They also set a binding minimum target of at least 27% for the share of renewables in gross final energy consumption, as well as an indicative minimum 27% improvement in energy efficiency.

Although the communications assume that the target to reduce emissions by 40% by 2030 is now EU policy, formally, these targets adopted by the European Council have yet to be approved by the legislature. In its January 2014 Communication on the 2030 climate and energy package, the Commission invited the Council and Parliament to agree by the end of 2014 that the EU would adopt the 40% emissions reduction target and the ‘at least 27%’ target for the share of renewable energies.

The previous European Parliament, in a closely-fought resolution adopted in February 2014 in response to the Commission’s 2013 Green Paper on possible climate targets, had called for a 40% cut in CO2 emissions, a 30% target for renewable energy and a 40% target for energy efficiency by 2030, all of which should be binding. The newly-elected Parliament has not yet taken a position on these climate and energy goals, so we don’t yet know if its position will differ from that adopted in February 2014, although the 40% overall reduction in emissions by 2030 seems agreed by both institutions.

Implications for agriculture

In a previous post, I pointed out that the agricultural sector will be affected by these climate targets through three different mechanisms:

    By the requirement that it must contribute to the overall 40% emissions target;
    By the potential demand for land for the production of bioenergy to help meet the ‘at least 27%’ renewable energy target; and
    By the impact of additional abatement costs through a more effective Emissions Trading System (ETS) on its use of fossil fuel energy, though my back-of-the-envelope calculation in that post suggested that the latter would not be that significant.

However, the Commission’s 2030 framework communication and the European Council’s October 2014 conclusions left many unanswered questions, both about the legislative framework for mitigation in the agricultural sector and the significance of the future role of bioenergy.

On mitigation, questions remain about how to recognise the European Council’s conclusion that “the multiple objectives of the agriculture and land use sector, with their lower mitigation potential, should be acknowledged, as well as the need to ensure coherence between the EU’s food security and climate change objectives” when setting national targets for the non-ETS sectors under a new Effort Sharing Decision, as well as how to incorporate the land and forestry sector into the 2030 greenhouse gas mitigation framework.

Once the legislative framework is in place, member states will then have to develop national strategies to reduce net emissions from the agriculture, forestry and land use sectors. The scale of the challenge has been emphasised in a recent exploratory report from the EU Joint Research Centre which examined GHG mitigation policy options for EU agriculture.

Taking account of the technological options likely to be available by 2030, and making assumptions on the likely emissions reduction target for the agricultural sector in line with the Commission’s 2050 Roadmap, the report concluded that the largest part of the required GHG reduction would have to be realised by a quantitative adjustment of agricultural production (herd size, yield and cultivated hectares), especially in the livestock sector. It estimated that the beef herd would be the worst affected, with a fall in cattle numbers of between 31% and 54% and a fall in beef output of between 18% and 31%, while cereal production would fall by between 3% and 8% and dairy output by between 4% and 9%.

Although the report represents the state of the art on modelling least-cost mitigation options in the agricultural sector, it is far from being the last word on the topic. It notes that its findings must be qualified by the fact that it did not take account of other possible mitigation options such as changes in diets or a reduction in food waste. It also did not attempt to address the role of carbon leakage, which will depend, in part, on the commitments other countries make in their contributions to the UNFCCC Paris Protocol in December. Nor was it able to take account of the integration of the forestry and land use sectors into the EU’s climate framework. These are some of the issues member states will have to address when preparing action plans to meet their targets when the new Effort Sharing Decision is agreed.

On renewables, the main legislative issues revolve around a revised Renewable Energy package to set out the support framework for bioenergy after 2020 as well as how to take account of the impact of bioenergy on the environment, land use and food production. The Commission has advocated that there should be no support for food-based biofuels after 2020, based on its belief that first generation biofuels have a limited role in decarbonising the transport sector. However, member states are unlikely to agree to phasing out all support immediately after 2020. There is currently a fierce debate between the Council and Parliament, with strong lobbies on either side, on setting a modified biofuels share in transport fuel in the years to 2020. A Commission document setting out the state of play on the sustainability of biomass used for electricity, heating and cooling in the EU was published last July.

There are also significant uncertainties in implementation around the likely importance of biomass and biofuels in the heat, electricity and transport sectors by 2030 and beyond which depends not only on support and sustainability policies but also on prices and technological developments in the energy system.

The Energy Union package does not throw any new light on how the Commission intends substantively to address these issues, but it does give us a better idea of the timescale in the accompanying roadmap. Specifically,

    Legislative proposals on the Effort-Sharing Decision and the inclusion of Land Use, Land Use Change and Forestry (LULUCF) into the 2030 Climate and Energy Framework will be proposed in 2016.
    A new Renewable Energy Package, including a new Renewable Energy Directive for 2030; best practices in renewable energy self-consumption and support schemes; and a new policy for sustainable biomass, will be proposed in 2015-2016.

International context

There is also a link between progress on these initiatives domestically within the EU and progress in setting international targets in the negotiations leading to the Paris Protocol next December to be implemented from 2020. The Commission’s Paris Protocol communication in the Energy Union package argues that, in order to promote collective action consistent with the IPCC’s findings, the Paris Protocol must secure ambitious reductions of emissions by specifying that the long term goal should be to reduce global emissions by at least 60% below 2010 levels by 2050 (equivalent to the EU’s long-standing objective of halving global emissions by 2050 compared to 1990).

It also argues that the Protocol should require emissions reductions in all sectors, including agriculture, forestry and other land uses. The multiple objectives of agriculture, forestry and other land use should be acknowledged, as well as the need to ensure coherence between inter alia food security and climate change objectives. It notes that (p. 10):

Climate stabilisation will also require healthy oceans and terrestrial ecosystems to absorb and balance residual anthropogenic emissions. Agriculture, forestry and other land uses currently represent 24% of net anthropogenic GHG emissions. The emissions from the land use sector can be significantly reduced, and enhanced sinks could compensate residual global emissions. In addition, tropical forests could remove a significant share of other emissions, for instance if REDD+ would become fully effective.

However, including agriculture and land use in mitigation targets in the Paris Protocol is controversial. This is partly because of very different trajectories in developed (Annex 1) and developing (non-Annex 1) countries. For example, between 1990 and 2005, emissions in the agriculture, forestry and land use sector increased by 32% in non-Annex 1 countries, while they decreased in Annex I countries by 12% in that period. Also, countries may have very different opportunities to mitigate emissions, particularly as regards the role of forestry. There is also concern that potential restrictions could inhibit countries in increasing food production either to help meet food security objectives or to increase export earnings. Thus the motivations of countries to include agriculture in an agreement are very different. Many countries have made clear that their priority is adaptation and not mitigation. It was only at the Durban Summit in 2011 that agriculture was officially included on the agenda for the first time.

Thus it is not clear if the EU will be successful in its objective to include agriculture, forestry and land use in mitigation targets even if the Paris Summit is successful and adopts a Protocol. If this does not happen, it will aggravate the problem of carbon leakage if the EU alone goes ahead with stringent targets for its agricultural sector.

Even apart from this uncertainty, the timetable to put the post-2020 framework in place is tight. The Commission is expected to propose its key pieces of legislation in 2016, and it could take a year for this to be agreed by the legislators. Then the member states have to prepare their national action plans and have them approved by the Commission. This means it will be likely towards the end of this decade before the post-2020 framework is fully in place.

This post was written by Alan Matthews.

Photo credit. Acclimatise. Picture by David Baird and licensed for reuse under this Creative Commons licence.

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