Energy and climate policies to watch this year
BREXIT AND ENERGY: U.K. companies will be set apart from the rest of the EU’s Emissions Trading System starting this year, after the European Commission moved unusually quickly to protect the market from the impact of a hard Brexit on March 29, 2019. Brussels introduced a regulation to mark British-issued permits for 2018 and 2019, so they could be voided if Britain withdraws before companies have to submit their 2018 permits on April 30, 2019. The fear is that if the U.K. crashes out of the EU, those permits would flood the ETS, destabilizing it. However, the U.K. can also change the deadline for submitting permits so it falls sometime before Brexit.
2030 CLIMATE RULES: New rules cutting emissions from non-industrial sectors and limiting deforestation will take effect this year after European policymakers managed to hammer out deals on the bloc’s two major climate files late last year. The new rules set binding national emissions targets for transport, agriculture, buildings and other sectors, and create carbon accounting rules for land use, land-use change and forestry, in the hopes of ensuring the use of forests to absorb CO2.
CLEAN ENERGY PACKAGE: It’s game on this year for the Commission’s jumbo Clean Energy Package. Expect the European Parliament and the Council to clash over several issues, including how ambitious the EU should be when redesigning the bloc’s power market, improved integration for renewables and the process for giving more rights to consumers producing their own power. Key files such as the energy efficiency and renewables directives and the electricity market design proposals are expected to head into final inter-institutional negotiations this year. Expect a tough fight on energy savings and green targets, the role of crop-based biofuels in transport, and how to collaborate in case of power shortages.
NORD STREAM 2: It’s crunch time for the Nord Stream 2 pipeline. While the EU can’t kill the Russian-backed project, it can make life difficult for Gazprom. In late autumn, Brussels suggested extending EU gas rules to pipelines entering the bloc from non-EU countries to bring the operation of the project under the bloc’s energy liberalization rules; that means the pipeline couldn’t be owned by Gazprom and would have to allow third parties to use it. A new Danish law might kill the project in its current route, U.S. sanctions could make financing tricky, and a new German government may be less beholden to Gazprom than the previous coalition that included the pro-Moscow Social Democrats.
KEEPING GLOBAL WARMING AT 1.5 DEGREES: A United Nations panel of climate scientists will deliver a first study this October on the impact of a 1.5-degree Celsius global temperature rise, and the options for cutting emissions enough to keep temperatures from getting any higher than that level. The report will likely provide a scientific basis for the EU and the rest of the world to strengthen pledges made two years ago during the Paris talks to tackle global warming. The Paris agreement calls on countries to regularly hike their commitments. The EU’s current climate policies are geared toward limiting global warming to 2 degrees. Global temperatures are now just over 1 degree above pre-industrial levels.
MONEY RUNS OUT FOR COAL: European coal mines receiving state aid to cover production losses, layoffs and other problems must be closed by December 31. That doesn’t signal an end to European mining, but the bloc’s last coal mines have struggled to stay afloat, under pressure from emissions-reduction policies and — in some countries — an end to coal power by the 2020s. The Commission has approved billions in aid for countries including Spain, Romania, the Czech Republic and Poland. And unsubsidized mines in countries like Poland are expected to continue digging — Warsaw predicts coal will make up 60 percent of Polish energy by 2030, down from 80 percent today.
This article is part of the spring policy primer.