How have we got to where we are now?
In recent notes for The Conservative Woman, I described the UK’s in effect unilateral zero emissions target as ‘futile gesture politics’, and concluded that international initiatives to ‘control’ climate change by curbing CO2 emissions cannot succeed. In this brief background piece I discuss the main policy developments behind our ‘decarbonisation’ policies: how have we got to where we are now.
The EU’s climate change policies
As a member of the EU, the UK has, of course, been subject to the EU’s climate policy. The EU has undertaken many climate-related initiatives since 1991, when it issued the first Community strategy to limit carbon dioxide (CO2) emissions and improve energy efficiency. Later, the EU was an active participant in the Kyoto climate change conference in 1997, signing the Kyoto Protocol by which the EU committed to an 8 per cent decrease in emissions between 1990 and 2008-2012. The EU and its member states have met this commitment, according to the European Commission. The Kyoto Protocol’s second commitment period was agreed at the Doha conference in 2012. The EU countries (with Iceland) agreed to meet, jointly, a 20 per cent reduction target by 2020 compared with the 1990 baseline.
This 20 per cent reduction target was in line with the EU’s own target of 20 per cent by 2020, as set out in the EU’s 2020 Climate and Energy Package, agreed in 2007. This package set three key targets:
1. The aforementioned 20 per cent cut in greenhouse gas emissions, compared with 1990 levels.
2. 20 per cent of EU energy from renewables, which was, arguably, included under pressure from Germany which was concerned its renewable energy policies would put German business at a competitive disadvantage. If the EU had been just concerned about climate change, it would not have specified how the GHG emissions target should be met. It would not have specified a renewables target. Incidentally, PM Tony Blair committed to a target of 15 per cent of the UK’s energy consumption (not just electricity generation) from renewable sources by 2020, which has significantly raised the costs of meeting the emissions targets.
3. A 20 per cent improvement in energy efficiency.
The EU emissions trading system (EU ETS), the EU’s key tool for reducing greenhouse gas emissions (GHG), principally CO2, was established in 2005. The EU ETS works on the ‘cap and trade’ principle. A cap is set on the total amount of certain greenhouse gases that may be emitted by installations covered by the system. Within the cap, companies receive or buy emission allowances, which they can trade with one another as needed. Auctioning is currently the default method for allocating allowances. The cap is being reduced over time so that total emissions fall in line with the EU’s targets. The European Commission estimates that it covers around 45 per cent of the EU’s emissions.
The ETS has evolved since its introduction and is currently in Phase 3 (2012-2020). Phase 1 ran from 2005 to 2007 and Phase 2 ran from 2008 to 2012 (the initial Kyoto commitment period). One of the major changes introduced in Phase 3 was the single EU-wide cap on emissions, in place of the previous system of national caps. Phase 4 is planned to run from 2021 to 2030 (in line with the 2015 Paris Agreement, under which the EU committed to reduce GHG emissions by at least 40 per cent by 2030 compared with 1990).
The UK remains subject to the EU’s climate change policies, including the ETS, whilst it is a member of the EU. Given the single EU-wide cap, this implies that the overall impact on the EU’s total traded emissions of any UK cuts in traded emissions could well be zero, other things being equal.